SINGAPORE: The Ministry of Finance (MOF) is seeking feedback from the public on proposed changes to the Goods and Services Tax (GST) Act, including the introduction of a levy on imported services and enhanced powers for officers investigating serious tax crimes.
During his Budget 2018 speech, Finance Minister Heng Swee Keat announced plans to impose GST on imported digital services such as movie and music streaming services and mobile apps from 2020.
GST on the imported services will take effect in two ways.
The first is a reverse charge mechanism for business-to-business imported services, where the local GST-registered business customer is required to account and pay GST to the Inland Revenue Authority of Singapore (IRAS) directly on the services it imports.
Most GST-registered businesses will not be affected, however, as they can claim full refund of the GST they incur on their purchases including imported services, MOF said in a news release on Thursday (Jun 28).
The businesses that will be affected are primarily financial institutions and residential property developers, which do not get such full refunds, MOF added.
The second way the GST on imported services will be effected is through an overseas vendor registration (OVR) mode for business-to-consumer (B2C) transactions.
Under the OVR, overseas suppliers and electronic marketplace operators which make significant supplies of digital services to local consumers are required to register with IRAS. Once GST-registered, they will collect GST on their B2C supplies of digital services and pay it to IRAS.
ENHANCED POWERS FOR IRAS
The proposed changes to the GST Act also includes giving IRAS officers enhanced powers to investigate tax crimes.
If accepted, IRAS investigation officers will be able to perform forced entries, arrests without warrants, and body searches for certain serious tax crimes.
"Syndicates and recalcitrant taxpayers are becoming more active and are employing more sophisticated strategies for tax fraud," MOF said, adding that suspects have in the past refused to cooperate with IRAS' investigations, hand over potential evidence, and also destroyed evidence.
"Such acts of non-cooperation affect IRAS’ effectiveness in bringing the perpetrators to justice," MOF said.
IRAS' powers will also be expanded to allow it to gather all information relevant to its investigations from any individual. It will also be allowed to share information with other law enforcement agencies to combat serious crimes that it assesses as critical for investigation or prosecution of serious crimes.
Custodial sentence will also be introduced for unauthorised collection of GST under the proposed changes, and alternative evidence besides invoices or receipts will be permitted to prove the crime.
Under the proposed changes, it will also be an offence for a GST-registered business - without reasonable excuse or through negligence - to collect more GST than allowed.
The amendments also extend customer accounting to transactions with the Government. This will help ease business compliance as GST-registered supplies will not need to differentiate their transactions with the Government and with GST-registered customers.
The last proposed change will also allow the disposal of documents or items seized during investigation if the owner of the seized items fails to collect the items upon the end of investigation.
The public can provide their feedback between Jun 28 and Jul 18.