MOF seeks comments on proposed amendments to Goods and Services Tax Act

28 July 2020

From 20 July 2020 to 7 August 2020, the Ministry of Finance (“MOF”) is seeking feedback on the draft Goods and Services Tax (Amendment) Bill 2020 (“draft Bill”). Among other things, changes to the Goods and Services Tax Act (“GST Act”) are proposed to enhance the powers of the Comptroller of Goods and Services Tax (“Comptroller”) to safeguard public monies, investigate tax offences and counter GST fraud, and as well as to improve GST administration and the clarity of existing provisions.

GST on imported services

The following are among proposed amendments to enhance the Comptroller’s powers to safeguard public monies, investigate tax offences and counter GST fraud:

  • Introduce measures to counter Missing Trader Fraud: Missing Trader Fraud is a fraud scheme used by syndicates where the seller absconds with the GST charged on his sales (“Missing Trader”) while businesses along the supply chain continue to claim refund of GST incurred on their purchases. Syndicates make the detection of the Missing Trader difficult by interposing many businesses along the chain to deter the Inland Revenue Authority of Singapore (“IRAS”) from tracing back to the Missing Trader. Proposed changes to deter Missing Trader Fraud include allowing the Comptroller to deny a GST-registered business’ input GST claim if the business knew or should have known that its purchase was part of or connected with a fraudulent arrangement. It is also proposed to impose a surcharge of 10% of the amount of input GST denied for a business who should have known the purchase was part of or connected with a fraudulent arrangement.
  • Enhance IRAS’s powers to seize goods for investigation of tax offences: Changes to the GST Act are proposed to allow IRAS to seize goods that are suspected to be used or intended to be used by a person to commit an offence under the GST Act, and suspected to constitute evidence of an offence under the GST Act or which may aid in the investigation or prosecution of such offence.

Other proposed amendments

The draft Bill also proposes amendments to improve GST administration and
the clarity of existing provisions. For example, to further deter tax avoidance arrangements, it is proposed to introduce a surcharge equal to 50% of the amount of additional GST imposed by the Comptroller as a result of the adjustments made to counteract the tax avoidance arrangement. It is also proposed to amend the GST Act to mandate that GST refunds are to be made electronically.

Reference materials

The following materials are available on the MOF website www.mof.gov.sg: