Debated in Parliament on 10 Sep 2012.
Order for Second Reading read.
Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."
The Goods and Services Tax (Amendment) Bill 2012, or the GST Bill for short, comprises seven amendments. The first amendment gives legislative effect to a GST initiative announced in Budget 2012. The remaining six amendments arise from our ongoing review of the GST system. The draft Bill was released for public consultation in July 2012. It incorporates relevant feedback and suggestions from the public.
Let me first touch on the provisions in the Bill that give legislative effect to a GST initiative announced in Budget 2012, namely, GST exemption for investment-grade gold and precious metals.
Clauses 3, 6 and 14 of the Bill provide for GST exemption on the import and supply of investment-grade gold and precious metals. This move supports IE Singapore to develop a new gold refining and trading cluster in Singapore. The exemption means that actively traded investment-grade gold and other precious metals will enjoy the same GST treatment as other financial instruments that do not attract GST. Clauses 2, 7, 11, 13 and 15 of the Bill are consequential amendments to administer the change.
In addition, to facilitate precious metal refining, a new GST scheme will be introduced for qualifying refiners of precious metals and consolidators of scrap materials for refining. The new scheme confers two benefits. First, it eases cash flow by suspending the payment of GST on the import and purchase of scrap materials for refining. Second, it allows claiming of input tax incurred for consolidating and refining scrap materials into investment-grade precious metals.
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Clauses 4 and 10 of the Bill give effect to the scheme.
The remaining six amendments to the GST Act arose from our on-going review of GST policies and administration.
First, we will extend the scope of GST zero-rating of prescribed financial services relating to goods for export. Currently, GST zero-rating is applicable to prescribed financial services, such as export credit and trade credit insurance, in relation to goods for export from Singapore. Clause 5(b) of the Bill extends GST zero-rating to the same financial services in relation to supplies involving goods that are located outside Singapore. This is in line with the existing policy of maintaining the competitiveness of our international services.
Second, we will allow the Comptroller and Minister to set conditions when granting remission. Currently, the Minister and the Comptroller of GST have powers under the GST Act to grant remission of GST on grounds of poverty or where it is just and equitable to do so. Clause 12 of the Bill provides clarity on the Comptroller's and Minister's powers to impose conditions when granting such remissions so as to prevent potential abuse. Clause 12 also provides for the tax remitted to be recoverable in the event of the taxpayer's failure to comply with the conditions imposed. The provisions in clause 12 are similar to those in other Acts, such as the Income Tax Act and Stamp Duties Act.
Third, we will extend the Temporary Removal Scheme to goods removed temporarily from approved warehouses for repairs. Currently, the Temporary Removal Scheme allows qualifying goods, such as art pieces, to be removed temporarily from approved warehouses under Singapore Customs' control for auctions and exhibitions without the payment of import GST. This scheme aims to promote auctions and exhibitions and use of specialised storage facilities in Singapore. Clause 8 of the Bill extends the scheme to cover goods removed temporarily for repair, conservation and restoration. This is because it may not be practical for all repairs to be done within the Approved Specialised Warehouses.
Fourth, consistent with the third amendment, we will allow GST zero-rating of repair services performed on qualified goods outside of Approved Specialised Warehouse. Currently, repair services performed inside Approved Specialised Warehouses to restore and conserve the qualifying goods are GST zero-rated. Clause 5(c) of the Bill extends the GST zero-rating to repair services performed on the qualifying goods when they are temporarily outside the Approved Specialised Warehouses.
Finally, the Bill makes two technical amendments with no change in policy. The first is to align the general provision on zero-rating of exports and international services with that for the Approved Marine Customers Scheme and Specialised Warehouse Scheme. The second standardises the text used in the different subsections for the Approved Contract Manufacturer and Trader (ACMT) Scheme. Sir, I beg to move.
Question proposed.
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Mr Speaker, Sir, I would like to declare that I am the President of the Singapore Chinese Chamber of Commerce and Industry; and the Singapore Jewellers Association and Diamond Exchange of Singapore are among our trade association members.
I rise in support of the Government's efforts to promote Singapore as a global investment precious metal trading hub, with the amendments to the Goods and Services Tax (Amendment) Bill. Exempting the import and supply of investment-grade gold and precious metals from GST would bring gold and other investment-grade precious metals like silver and platinum on par with other financial instruments like stocks, bonds and commodity futures.
The introduction of a new Approved Refiner and Consolidator Scheme will also ease the cash flow of qualifying refiners and consolidators of precious metals in the payment of input GST on the import and purchase of raw materials, as well as to relieve input tax on precious metal refining. This would provide the right incentives for Singapore to compete with Hong Kong and other bullion trading centres in the region. Singapore was once a gold trading hub in the 1980s, but refiners had unfortunately been put off by Singapore's taxes, choosing instead to mould and sell gold bars in Hong Kong which does not impose duties on bullion, and Japan where the consumption tax on gold is 5%. The changes may thus be significant enough to lure refiners to open up factories in Singapore, and to have more gold traders set up their offices here to store bullion.
Having said that, before Singapore can compete with other gold trading hubs like Hong Kong and Dubai, perhaps an equivalent of the London Bullion Market Association needs to be set up. This could help gold-related industries, such as refiners. If more were around, it would help to boost the gold industry in Singapore.
In tandem with the Government's aspirations to develop Singapore into a regional gold trading hub, we look forward to seeing the introduction of certain incentives which could uplift the entire local jewellery manufacturing and retail scene. Such measures could be complementary and propel Singapore into a dynamic jewellery hub, in addition to being a gold trading hub.
Following the implementation of GST in 1994, the Singapore jewellery landscape has been dealt a rather big blow. As jewellery is a luxurious item, the additional cost burden attributed to GST is very significant. It has made us uncompetitive in pricing, with the result that Singapore has trailed far behind Hong Kong. Traders and buyers also find the GST to be a deterrent.
Hong Kong does not have a GST scheme, as we all know. The Hong Kong jewellery scene continues to be very vibrant and its jewellery shows are excellent examples. Of course, part of the reason for this dynamic growth is due to the vast China market and natural hinterland of Hong Kong.
Hong Kong holds a few large-scale international jewellery exhibitions every year. The HKTDC Hong Kong International Jewellery Show attracted 3,200 exhibitors, while the Hong Kong Jewellery and Gems Fair had a total of 3,500 exhibitors. The Singapore International Jewellery Show, on the other hand, is of a much smaller scale, with only 190 exhibitors.
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We would strongly urge our Government to provide more relevant incentives for the local jewellery industry so that Singapore may reinstate its status as a jewellery hub. This would supplement our efforts to grow Singapore into a regional gold trading hub. Sir, with that, I support the Bill.
Mr Speaker, Sir, I thank the hon Member Mr Teo Siong Seng for his support of the GST (Amendment) Bill.
As Mr Teo has noted, the Bill will boost efforts to attract refiners and gold traders to set up factories and offices in Singapore. Mr Teo has suggested that an equivalent of the London Bullion Market Association (LBMA) be set up. It turns out that there is already a Singapore Bullion Market Association which we understand has been inactive for some time. And, in fact, with the introduction of GST exemption for investment-grade gold, the major industry players have decided to come together as a body for the gold industry to revive the Association. According to the Association, informal consultations were held in March this year and an Executive Committee was formed in April. The Government welcomes the opportunity to work with the Association to promote growth of gold-related industries.
As for the London Bullion Market Association, I would like to share with Members that it was formerly incorporated in 1987 in close consultation with the Bank of England. Accreditation, however, may have started as early as 1934, which was when the LBMA's predecessor, the London Gold Market, compiled its earliest list of approved refiners. This is perhaps the reason why the LBMA good delivery lists are widely recognised by the industry as the de facto assurance of bullion bar quality and determine whether the bullion bars can be capable of being traded on the international market, particularly to be readily accepted for delivery on many international commodities exchanges, such as the Singapore Mercantile Exchange and the New York Commodities Exchange. On the other hand, non-LBMA gold bars may be traded internationally but are not accepted for delivery on commodities exchanges. So based on this industry feedback, we have decided to leverage on the LBMA accreditation for GST exemption for a start, but we will be very happy to discuss with the Singapore Bullion Market Association what else they see as potential for creating conditions for growth of these industries.
The Member has called for the introduction of certain incentives which could uplift the entire local jewellery manufacturing and retail scene. The Government is committed to helping our local SMEs, including jewellery manufacturers and retailers, and has put in place many schemes primarily through SPRING Singapore. Firms, the local jewellery manufacturing and retail sector, are very welcome to take advantage of them as many have already done so.
Mr Teo has referred to the vibrant jewellery scene in Hong Kong which does not have a GST scheme. In Singapore, we have a broad-based GST system with few exemptions. Nonetheless, our retail scene remains competitive and attractive to international retailers. As an example, according to Global Blue, a world leader in tax refund services, Singapore is now the top destination in the world for Chinese tourists to shop for luxury watches and jewellery, beating even Switzerland, a country known for its traditional stronghold in upmarket timepieces.
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I would like to assure Mr Teo that the Government will continue to work with the industry associations, such as the Singapore Retailers Association and the Singapore Bullion Market Association, to grow their respective industries.
*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. – [Mrs Josephine Teo].
Bill considered in Committee; reported without amendment; read a Third time and passed.
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