On 11 June 2014, the Ministry of Finance (the "MOF") commenced a public consultation on the draft Goods and Services Tax (Amendment) Bill 2014 (the "Draft Bill") and its related subsidiary legislation. The proposed changes arise from on-going reviews of the goods and services ("GST") system. The consultation period closes on 1 July 2014.
The proposed amendments are as follows:
- Allowing GST-registered persons to fully claim GST on re-import of goods belonging to their customers: To facilitate outsourcing arrangements, GST-registered contractors who send their customers' goods overseas for value-adding services by an overseas sub-contractor will be able to fully claim the GST incurred on re-import of such goods, instead of only the portion of import GST pertaining to the value-added component. This change will take effect from 1 January 2015.
- Providing for non-legal entities to claim and account for GST on goods, land, buildings and intellectual property (collectively referred to as "properties"): If GST- registered non-legal entities (e.g. a partnership or a society) hold properties that are used for their businesses through legal entities (e.g. partners of a partnership, a company), they will be allowed to claim GST incurred on the acquisition of such properties. At the same time, they will be required to account for GST on supplies of such properties, e.g. when they sell the property. This change, which will take effect on 1 January 2015, is intended to place non-legal entities on par with legal entities in relation to the holding of properties.
- Clarifying the scope of GST zero-rating in relation to goods for use or installation on ships: A technical change will be made to clarify that GST zero-rating applies only to the sale or rental of goods that are used or installed on ships, and not to services such as procurement or logistics services relating to the goods.
The following materials are available from the MOF website www.mof.gov.sg.