Partner for the companies GST Services Department, Kor Bing Keong, says this is necessary to level the playing field for local suppliers.
“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.”
Ernst and Young has included this proposed tweak to the GST rules in its Budget 2016 wishlist.
If the suggestion is adopted, it would see overseas companies having to register to pay GST in Singapore depending on their sales volumes, and it would be the prerogative of these companies whether or not to pass on the tax burden to consumers.
Ernst and Young has also urged the government to tax companies earning below S$1 million a year so that it can increase money flowing into the government coffers.
Said Mr Kor:
“The government could consider lowering the GST registration threshold to S$500,000 per annum. A high GST registration threshold was impot 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.”
At present, only companies earning over S$1 million a year need to register to pay GST.