Bill to amend Goods and Services Tax Act 1993 introduced to implement measures announced in Budget Statement including new GST rates

28 October 2022

On 20 October 2022, the Goods and Services Tax (Amendment) Bill (“Bill”) was introduced in Parliament. The Bill seeks to amend the Goods and Services Tax Act 1993 (“GST Act”) to give effect to measures announced in the 2022 Budget Statement and other changes.

Some of the amendments which will be made to the GST Act are as follows:

  • Change in GST rate from 7% to 8% from 1 January 2023, and from 8% to 9% from 1 January 2024.
  • Update GST treatment for supply of travel arranging services: From 1 January 2023, the zero-rating of the services comprising the arranging of the international transport of passengers and related insurance, and the arranging or facilitating of the booking of accommodation will depend on the place of belonging of the contractual person and the person directly benefitting from the services. The supply of these services would therefore only qualify for zero-rating if the services are contractually supplied to a person who belongs outside Singapore, and directly benefits persons who either belong outside Singapore or are GST registered in Singapore.
  • Clarify how the transitional rules in the GST Act are to operate in the event of a change in GST treatment or GST rate. A new Part 6A will be introduced for this purpose.
  • Refine the rules for taxing low value goods and imported services by way of the Overseas Vendor Registration (OVR) and Reverse Charge (RC) regimes. Low value goods are goods valued up to S$400 that are imported via air or post. When in force, the changes will provide tax certainty and ease the compliance burden for businesses, ahead of the introduction of GST on imported low value goods and imported non-digital services from overseas suppliers with effect from 1 January 2023.
  • Measures to counter Missing Trader Fraud schemes: Missing Trader Fraud (“MTF”) schemes are schemes used by syndicates where the seller absconds with GST he collected on his sales without paying the GST over to the Inland Revenue Authority of Singapore (“IRAS”), while businesses further down the MTF chain continue to claim refunds on input GST paid on their purchases from IRAS. To provide strong deterrence against such schemes, criminal sanctions will be imposed under a two-tier approach. Tier 1 offences deal with the more culpable persons such as masterminds and co-conspirators who devise and/or direct such fraud schemes, as well as syndicate members who know they are participating in a fraudulent scheme. This offence carries a maximum imprisonment term of 10 years and/or maximum fine of S$500,000. Tier 2 offences apply to any person who is a current or former sole-proprietor, partner or director of a business entity that is eventually used in a MTF arrangement. Tier 2 offences target persons such as nominee directors who are typically recruited into such schemes to incorporate entities which are then used by syndicates for fraudulent purposes. This offence carries a maximum imprisonment term of one year and/or maximum fine of S$50,000.

Public consultation on draft Bill

From 13 June 2022 to 4 July 2022, the Ministry of Finance (“MOF”) conducted a public consultation on a draft version of the Bill and sought comments on the proposed changes to the GST Act and. On 10 October 2022, MOF issued a summary of its response to feedback received from the public consultation.

Reference materials

The following materials are available from Singapore Statutes Online sso.agc.gov.sg and the MOF website www.mof.gov.sg: