SYNOPSIS OF GST BILL 19931

• Citation: (1993) 5 SAcLJ 121
• Published date: 01 December 1993
• Date: 01 December 1993

The Goods and Services Tax (GST) Bill was introduced in Parliament on 26 February 1993 and read a second time on 19 March 1993 when it was referred to a Select Committee of Parliament. The Bill was preceded by a White Paper issued on 9 February 1993 in which the Government declared its intention to pass the Bill before the imposition of the GST on 1st April 1994. The Bill is based on the UK Value Added Tax Act with some additions from the New Zealand GST Act2. The Inland Revenue Authority of Singapore issued on 8 April 1993, issued for public discussion a comprehensive set of the draft subsidiary legislation proposed to be made when the Bill becomes law (Straits Times, 8 April 1993). The Bill contains administrative, secrecy, penalties and enforcement provisions following provisions found in the Income Tax Act. Other than those provisions the main provisions of the Bill can be classified as follows:

Imposition of GST (charging provisions)3

GST is imposed on:

1. (a) any taxable supply of goods and services made in Singapore by a taxable person in the course or furtherance of “business”; and

2. (b) the importation of goods into Singapore.

GST on any supply of goods or services is a liability of the person making the supply and (subject to provisions on accounting and payment) becomes due at the time of supply4. Tax on the importation of goods is charged, levied and payable as if it were customs duty and as if all goods imported into Singapore are dutiable and liable to customs duty. It is noteworthy that the definition of “customs duty” in clause 2 only covers import duty as opposed to excise duty. “Business” has a wide meaning and includes any trade,

profession or vocation and the provision of facilities by a club or society to its members.5 Business must be given its natural meaning and is wide enough to include the deliberate carrying on of an activity or activities. A business requires the carrying on of an occupation, function or activity which includes the making of taxable supplies for a consideration.

Extent of Tax (mechanics of GST)

Who?

Who is a taxable person? A person who makes or intends to make taxable supplies is a taxable person while he is or is required to be registered under the Bill. A taxable supply is a supply of goods or services made in Singapore other than an exempt supply.6 Therefore a taxable person is a registrable person i.e. one who makes or intends to make at least $ 1 million in value of taxable supplies per year (“turnover”) and in the course of “business”7.

What?

What is the definition of supply? In the Bill, “supply” includes all forms of supply, but not anything done otherwise than for a consideration. Hence it will include all forms of supply done for a consideration including sale of non-residential land, leases, hire and certain rezoning of land.8 Anything which is not a supply of goods but is done for a consideration (including, if so done, the granting, assignment or surrender of any right) is a supply of services. A software licence agreement or a franchise would fall within this definition. The 2nd Schedule specifies how certain transactions are to be treated either as a supply of goods or a supply of services or as altogether outside the scope of the Bill. For example paragraph 3 of the 2nd Schedule provides that the supply of any form of power, electricity, gas, water, light, heat, refrigeration, air-conditioning or ventilation is a supply of goods. Of interest to property lawyers would be paragraph 4 of the 2nd Schedule which provides that the grant, assignment or surrender of any interest in or right over land or of any licence to occupy land is a supply of goods. Any alteration or addition to the Master Plan approved under the Planning Act9 which involves the rezoning of land from the “Residential” or “Rural Centre and Settlement” zone to another zone is a supply of goods comprising the rezoned land. The disposal of goods forming part of the assets of a business, even if free of charge, is a supply of goods. However gifts below $100 and industrial samples are exempted.

Where ?

The place of supply is important because to be taxable the supply must be made in Singapore. Clause 13 provides for determining the place of supply of goods or services i.e. whether they are supplied in Singapore or not. Generally, if the goods are in Singapore and not removed from or to Singapore, they will be treated as supplied in Singapore. Goods removed from Singapore10 will be treated as supplied in Singapore.

A supply of services will be treated as made in Singapore if the supplier belongs to Singapore. A supplier belongs to Singapore if he has a business or fixed establishment in Singapore; or if he does not have such an establishment if his usual place of residence is in Singapore.11

An exception for services is the “reverse charge”, ie all services received from abroad except exempt services are deemed to be taxable and the recipient would have to account for tax as if he were the supplier.12

When ?

The time of supply is important as it determines the tax point. The tax point is in turn important as it determines the incidence and amount of tax liable to be paid.

Generally the time is on the earlier of:13

1. (a) removal of goods or availability to buyer or time of performance of services;

2. (b) time of payment; or

3. (c) time of issue of tax invoice.

Lawyers would be keen to know that the GST (General) Regulations provide for special rules where the supply is a continuous supply involving work done over a period of time. In a continuous supply, the tax point occurs when a tax invoice is issued or payment is made, whichever is the earlier.

How much tax?

Clause 16 provides for tax to be charged at the rate of 3% on the value of a taxable supply of goods or services or on the value of imported goods as determined by the Bill14.

The value of a supply is the consideration in money excluding GST or the open market value15. Clause 17 provides for determining the value of supply of goods or services. In general, the value is the consideration in money but if the supply is not for a consideration or is for a consideration not wholly in money, the value will be its open market value. This is, however, subject to other rules in the Third Schedule which may be amended by order made by the Minister.

The value of imported goods is the price in money or the open market value16. Clause 18 provides for determining the value of imported goods. In general, the value is equal to the price in money plus customs duties and all costs of commission, packing, transport and insurance up to the port or place of importation. In other circumstances, the value of the imported goods will be the open market value as determined under the Customs Act.

It is noteworthy that value includes other taxes and duties eg customs and excise duties, entertainments duties etc ie GST is imposed on top of other taxes and duties imposed by reason of the supply. Stamp duties, registration fees, and motor vehicle COE fees are therefore excluded as they are levied on matters other than the supply eg on the document or on registration.

A solicitor who makes payments on behalf of his clients which are the contractual responsibility of that client eg...