E-commerce could be an area for Singapore to diversify tax base: Indranee

E-commerce could be an area for Singapore to diversify tax base: Indranee

SINGAPORE: The Singapore Government is looking at widening levies on e-commerce to broaden its tax base, Senior Minister of State (Finance and Law) Indranee Rajah was quoted saying in a Bloomberg report published on Wednesday (Nov 22). 

In the interview, Ms Indranee mentioned e-commerce as one area that would allow Singapore to further diversify its tax base. 

“You can imagine, 20 years from now, the way people purchase is very different and by that time online platforms will be mainstays, so if that’s not part of the tax regime, there’s going to be a lot of holes there,” she said. This change should have been achieved “probably yesterday”, she added.

Currently, online shoppers in Singapore are generally not taxed for their purchases, so long as the order does not exceed S$400, she said.

The process by which Singapore might efficiently tax smaller orders could be complicated, with other countries such as Thailand openly considering such a levy and facing objections, Bloomberg wrote.

“Because it’s a new area, and you want to have a look at countries that have implemented it and you want to learn from them, it’s not something we’re going to rush into but it’s also not something you can put off for too long,” Ms Indranee said. “Do your shopping” now, she joked.

Ms Indranee's comments came after Prime Minister Lee Hsien Loong signalled on Sunday that Singapore needs to prepare for tax increases, as the Government's spending has been increasing and will rise further.

She said the Singapore Government will ensure that its tax system is based on “solid” economic performance and on the principle that higher income earners pay more.

“It must be all based on solid economic activity,” Ms Indranee said in the report. Her assessment was that Singapore’s economy is “absolutely” in such a state now. 

Amid chatter that the Government could raise the Goods and Services Tax (GST), Ms Indranee declined to comment on specific changes.

She said Singapore’s tax regime is backed by the principles of diverse revenue sources, a progressive system based on income and economic growth. The GST system has been designed accordingly, she added.

The broad nature of the GST and the “offset packages” that have been in place to help lower-income residents demonstrate how the system meets those principles, Ms Indranee pointed out.

Reiterating the Prime Minister's point that Singapore needs to plan ahead, Ms Indranee noted that social spending will grow as the population ages. 

"We have been spending quite a bit on our social spending in the last few years, introducing a great number of social support measures. We have been using the money wisely and prudently," she said in the interview. 

"But we are also looking ahead, we are seeing needs for infrastructure spending, spending on ageing population. So we are going to have to need to think of ways in the future of how to fund that."

Source: CNA/am