Printed in Today paper, 5 January 2010
I run a small business with a turnover that falls within the GST exemption limit.
This exemption was supposed to be a benefit to assist small businesses but it turned out to be a penalty. I have to pay GST on my rental, utilities and purchases of supplies and services, but I am not able to recover the GST inputs from my sales to business customers. I cannot increase my prices to these customers to cover my GST inputs, as they do not receive any GST credit for purchases from exempt entities.
With great reluctance, I decided to “volunteer” to be a GST registered business and bear the burden and cost of keeping GST records and submitting quarterly returns to IRAS.
IRAS accepted my voluntary registration and sent me a written notice that have to attend a GST briefing within three months, failing which my registration would be cancelled. I tried to register for the next briefing but it was fully taken up. I sent an e-mal to register for the next briefing but have not received any reply after two weeks. I get the impression that IRAS does not really welcome a small business to volunteer to be registered for GST.
Instead of making life difficult for small business, I hope that IRAS will tell the Minister of Finance why small businesses are volunteering to register for GST, when they are not required to, and why it is troublesome for IRAS to collect small amounts of GST revenue from these volunteers.
It will be better for the penalty on small businesses to be removed, so that they do not have to volunteer to be registered for GST. This can be achieved by allowing all eligible purchases by business entities to be treated as GST credit, regardless of whether they were purchased from exempt or non-exempt suppliers.
Apart from helping the small businesses, it will simplify the GST system and reduce the burden to businesses of keeping separate records to comply with the accounting of GST. The loss of revenue to IRAS would be quite small and could be offset by the savings in their administrative cost. More importantly, there will be cost savings for the economy by reducing the unproductive work.
Tan Kin Lian
RESPONSE
I receive a call from IRAS to explain the delay in replying to my registration. I told them that the delay is unimportant. It is more important for the Minister of Finance to review the implementation of GST to remove the unintended consequences, i.e. many people "volunteering" to register for GST when they pay little GST. This has caused unnecessary work for the small business and IRAS.
Rex comments as follows,
ReplyDeleteIn the current sorry state of the economy, small businesses do play a part in helping to reduce the unemployment rate. Any obstacles should be speedily removed, or alternatively dialogue should be opened to discuss middle-road solutions on win win basis if these obstacles are not easy to remove from the perception of the government.
Minister of Finance should support NTUC chief's exhortation and quickly respond to this matter, and for this, they need to take initiative to bypass bureaucracies. (quicker). They should try to make the costs of doing business lower to encourage small business (cheaper) and in so doing there will be increased output of better quality (better).
CBT is pretty good idea. But IT ALSO APPLIES TO Government service. In fact since they design the rules which affect more people, the burden of working on CBT basis should actually be greater for Government than the small businesses. Teamspirit and Leadership by example should be practiced by the government, in this case MOF.
I hope something good will happen and i look forward to follow up posts on this issue.
REX
well reasons mr tan.
ReplyDeletehope you can be elect to be prime minister one day.
i guess you will help a lot of singaporean.
Mr Tan has helped many Singaporeans because his heart is in the right place. But he is unpopular with greedy people who do not like to see his views and actions dilute their profits. Some of these people have powerful connections and they work in tandem to undermine his credibility. I hope the general public is able to discern what is good and what is branded as good in our society where appearances and public media speeches often cloud what is really lurking below.
ReplyDelete