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Public feedback sought on GST changes, including two-stage hike to 9% rate

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The public has been invited to provide feedback on proposed amendments to the Goods and Services Tax (GST) Act that include the two-step change in GST rate from 7 per cent to 9 per cent.

The Ministry of Finance (MOF) is seeking feedback on five proposed legislative amendments, two of which were announced in the Budget statement on Feb 18 this year, it said in a statement on Monday (June 13).

The first amendment effects the change in GST rate from 7 per cent to 8 per cent from Jan 1 next year and from 8 per cent to 9 per cent from Jan 1, 2024.

GST was last raised from 5 per cent to 7 per cent in 2007.

The upcoming increase will bring in about $3.5 billion of revenue annually when the full hike is in place in 2024, and the revenue will go towards supporting healthcare expenditure and to take care of senior citizens while other areas of social spending rise as well.

The second amendment updates the GST treatment of travel-arranging services to be based on the "place of belonging rule" from Jan 1 next year. This ensures consistency in the treatment of the consumption tax for such services provided by local and overseas suppliers.

The proposed changes mean that such travel-arranging services would only qualify for zero-rating or 0 per cent of GST if the services are supplied to a consumer out of Singapore, and directly benefits people who either belong outside of Singapore or are GST-registered in Singapore.

Travel-arranging services include the facilitation of accommodation bookings.

The other three proposed changes are part of the periodic review of Singapore's GST system, MOF said.

This includes refining the rules for taxing low-value goods and imported services to provide tax certainty and ease the compliance burden for businesses.

This comes ahead of the introduction of GST levied on imported low-value goods and imported non-digital services from overseas suppliers, which takes effect Jan 1, 2023.

The public can provide feedback on the proposed amendments via e-mail from June 13 to July 4.

Consultation documents, including the draft GST (Amendment) Bill 2022, on the Ministry of Finance website and government feedback unit Reach's consultation portal.

They can use the prescribed template on the MOF's website to submit their comments by July 4.

A summary of the main comments received will be published, along with MOF's responses, on the ministry's website in August. The identity of respondents will not be disclosed in the summary.