Bill to amend Goods and Services Tax Act introduced

29 October 2020

On 6 October 2020, the Goods and Services Tax (Amendment) Bill (“Bill”) was introduced for first reading in Parliament. Among other things, the Bill seeks to amend the Goods and Services Tax Act (“GST Act”) to enhance the powers of the Comptroller of Goods and Services Tax (“Comptroller”) to safeguard public monies, investigate tax offences and counter GST fraud:

  • Introduce measures to counter Missing Trader Fraud: Changes will be made to disentitle a taxable person from claiming any credit for input tax on a supply made to the taxable person, if the taxable person knew or should have known that the supply was a part of what is commonly known as “missing trader fraud”. Illustrations of missing trader fraud will be provided in the new Ninth Schedule. Guidance for determining who is regarded as a person who “should have known” of this will also be provided. The GST Act will also be amended to provide for 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’ powers to seize goods for investigation of tax offences: The GST Act will be amended 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. 
  • Deterring tax avoidance arrangements: To further deter tax avoidance arrangements, the GST Act will be amended 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.

Background

From 20 July 2020 to 7 August 2020, the Ministry of Finance (“MOF”) conducted a public consultation on a draft version of the Bill. The feedback received mostly pertained to the measures introduced to counter Missing Trader Fraud and the enhancement of the GST rules to counteract tax avoidance arrangements. A summary of responses to the key feedback can be found in the MOF press release available on the MOF website www.mof.gov.sg.