GOODS AND SERVICES TAX (AMENDMENT) BILL

Order for Second Reading read.

The Minister for Finance (Dr Richard Hu Tsu Tau): Mr Deputy Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

Introduction

The Bill seeks to amend the Goods and Services Tax Act to give legislative effect to the change in tax treatment for trustee services announced in the 2000 Budget Statement. It also incorporates two other amendments to the Goods and Services Tax Act. Change in tax treatment announced in the 2000 Budget Statement

I have earlier in the fiscal year 2000 Budget announced that trustee services supplied by trustees situated in Singapore that satisfy the following two conditions can be zero-rated. Firstly, at least 80% of the value of the trust property is contributed by overseas settlors, and secondly, at least 80% of the beneficiaries and settlors are non-residents of Singapore.

A cardinal principle underlying the Goods and Services Tax is that it is a tax on domestic consumption of goods and services. Before the above changes were announced, the provision of trustee services by a trustee to the trust is standard-rated even if the settlors and beneficiaries of the trust are all or mostly foreigners, as the trustee representing the trust is situated in Singapore. In such cases, there is in-principle no domestic consumption, as the recipients of the services are in fact the beneficiaries and the settlors who are foreigners. Therefore, to put Singapore trustees on a more competitive footing with offshore trustees, I have decided to zero-rate the trustee services provided by the local trustee for such cases. Section 21 of the GST Act will be amended for this purpose.

Changes to the Act not arising from the 2000 Budget Statement

In addition to this amendment, the following amendments will also be made to the GST Act.

Sections 33(3) of the GST Act will be amended to specify the rules to be used by a local taxable person who is entrusted by his overseas clients to import and supply the goods in Singapore. The rules will provide greater clarity to businesses to determine the circumstances in which they can claim the GST paid on the goods imported and to account for GST on any supply of such goods in Singapore, as if he is the person making the supply. Arising from this, a consequential amendment will also be made to section 33(1). These amendments will serve to provide clarity to businesses.

A new section 34A will be inserted to the Act to deem input tax as being deducted by the transferee for assets transferred under a "Transfer of Business as a Going Concern (TOGC)" arrangement. This is to place a transferee who acquires assets under a TOGC on par with other GST-registered traders who purchase assets and pay the GST.

Sir, I beg to move.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. - [Dr Richard Hu Tsu Tau].

Bill considered in Committee; reported without amendment; read a Third time and passed.