More businesses should be subject to this tax.
Tax experts are urging the Singapore government to make more companies pay the Goods and Services Tax (GST) in order to boost revenue collection and help offset the projected increase in social spending.
In Singapore, only companies with a turnover of $1 million and above are required to register for the GST. Tax experts at Ernst & Young note that this threshold is significantly higher compared to other countries, and lowering it might provide an additional source of income for the government.
“The government could consider lowering the GST registration threshold to S$500,000 per annum. A high GST registration threshold was important at the start of GST implementation as it relieves small businesses from GST registration and compliance. GST has now become an integral part of businesses and GST-compliant accounting and point-of-sale software is readily available. With the expected increase in social spending by the government, a decrease in GST registration threshold could bring more businesses into the GST net and increase revenue collection,” said Kor Bing Keong, Partner, GST Services, Ernst & Young Solutions LLP.
In its Budget 2016 Wishlist, EY also urged the government to impose GST on overseas service providers which mostly do their business through digital means.
“The non-taxation of supplies made by overseas service providers through the digital economy does not only create a GST leakage to the government but also a price disadvantage to domestic suppliers, resulting in an uneven playing field,” Kor added.
EY added that the government can consider introducing new GST rules to require overseas service providers that sell to Singapore consumers to register for GST in Singapore if such sales exceed the GST registration threshold.
The government can also introduce simplified GST registration procedures for these overseas service providers. This would bring more transactions into the GST net, EY said.
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