Govt to top up S$1.4 billion to GST support package to reduce effects of inflation, bringing total to S$8 billion
Follow us on Instagram and Tiktok, and join our Telegram channel for the latest updates.
- Deputy Prime Minister Lawrence Wong announced a S$1.4 billion top-up to the Assurance Package
- It is to help Singaporeans deal with the impending Goods and Services Tax hike in the midst of rising inflation
- With this boost, the total amount of the support package will reach around S$8 billion
- He announced this during his opening speech when Parliament debated changes to the tax laws
- The proposed changes include having the tax apply to travel arranging services from Jan 1, 2023
NUR HIKMAH MD ALI
Published November 7, 2022Updated November 7, 2022
WhatsAppTelegramFacebookTwitterEmailLinkedIn
SINGAPORE — To reduce the effects of inflation, the Government will top up the Assurance Package by another S$1.4 billion to reach around S$8 billion, Deputy Prime Minister Lawrence Wong announced in Parliament on Monday (Nov 7).
Mr Wong, who is also the Finance Minister, was speaking in Parliament at the opening of a debate on the Goods and Services Tax (GST) hike as well as other amendments to Singapore's consumption tax regime that were proposed as part of the GST (Amendment) Bill.
ADVERTISEMENT
Last month, Mr Wong said that the Government would review the "sizing and components" of the Assurance Package, which comprises cash payouts to help Singaporeans deal with the impending GST hike, to account for the higher-than-expected inflation.
The GST is set to rise from 7 per cent to 8 per cent in 2023, and to further increase to 9 per cent in 2024.
Official forecasts by the Monetary Authority of Singapore last month put core inflation for the whole of 2022 at around 4 per cent on average, and for headline inflation to come in at around 6 per cent.
READ ALSO
Govt to review 'size, components' of GST support package due to higher than expected inflation: Lawrence Wong
Under the Assurance Package, all Singaporeans aged 21 and above will receive cash payouts that will be distributed over the next five years from December 2022.
For lower-income households, they will receive offsets covering about 10 years’ worth of extra GST expenses, which will help cushion the impact of the tax increase.
ADVERTISEMENT
Mr Wong said that more details of this enhancement will be revealed in his Budget statement next year.
GST (AMENDMENT) BILL
The Bill proposes to amend the laws related to the GST system, in order to put Singapore in a better position to fund its aspirations and to build a fairer and more inclusive nation, Mr Wong said.Besides laying out the legislation to allow the staggered GST hike in 2023 and 2024, the Bill also proposes other changes to the way the tax is collected and administered.
1. GST for a supply of travel arranging services
- If the Bill is passed, GST will apply to travel arranging services from Jan 1, 2023
- This includes the arranging and facilitation of international transport, accommodation and travel insurance
- Whether the service is subject to tax will depend on whether the location of the person contracting the service is in Singapore, and where the person who directly benefits from the service belongs
- For example, if the contractual customer of the service belongs in Singapore, GST will be charged at the standard rate
- This would ensure consistent tax treatment for travel arranging services, regardless of whether they are rendered by domestic or overseas providers
READ ALSO
Singapore cannot rely on 'sentiment-driven' collections for expenditure needs, GST hike to go ahead: Lawrence Wong
2. Refining the rules for taxing low-value goods and imported services
ADVERTISEMENT
- To prevent double taxation, provide tax certainty and ease compliance, the Bill proposes to refine the rules further for low-value goods and imported services under the Overseas Vendor Registration and Reverse Charge regimes
- For example, the proposed law will clarify that overseas vendors who procure
services already charged with GST from Singapore suppliers, and then supply these same services to their own customers in Singapore, need not charge GST on the latter - This only applies if the overseas vendors are on the “pay-only” regime where they do not make any claims for refund of GST that they incur on their purchases
READ ALSO
Delaying GST hike would be ‘highly irresponsible’, risking persistent shortfall in govt funding: DPM Wong
- The fraud scheme involves a seller who absconds with the GST he has collected on his sales, without paying it to the Inland Revenue Authority of Singapore (Iras), the tax authority here
- In such an instance, businesses further down the fraud chain would continue to claim refunds from Iras on the GST paid for their purchases
- The Bill proposes to implement criminal sanctions from Jan 1, 2023, which will directly target perpetrators
- Among the proposed maximum penalties for such offences is a 10-year jail term and S$500,000 fine for masterminds, co-conspirators and syndicate members, and a one-year jail term and up to S$50,000 fine for sole-proprietors, partners or directors of business entities involved in such fraud schemes
