Printed in TODAY paper on 20 February 2012
I APPRECIATE the Budget payout of up to S$5,000 to small companies to offset higher business costs, especially the simple approach to determine eligibility for this grant.
Could the Finance Minister consider another measure that would help not only small companies but also bigger businesses?
The Goods and Services Tax (GST) Act allows a business with annual turnover of under S$1 million to be exempt from paying GST. This seems to help a small business but is actually a disadvantage.
When a non-GST registered company supplies goods or services to a business, the latter is not allowed to deduct the purchase from its GST liability. The small business is compelled to reduce its price by the GST amount to remain competitive.
It would help small companies if a business customer is allowed to treat all its purchases as eligible for GST deduction, regardless of the supplier's status. This would not significantly dent GST revenue.
This would also benefit the entire business community by eliminating the need to issue tax invoices and keep a separate record of GST credits from eligible suppliers. The saving in accounting work and compliance cost for the economy could be significant.
This suggestion would need to be worked out in greater detail, but I believe that it is worth the effort to take a new look at our GST administration.
Tan Kin Lian
I APPRECIATE the Budget payout of up to S$5,000 to small companies to offset higher business costs, especially the simple approach to determine eligibility for this grant.
Could the Finance Minister consider another measure that would help not only small companies but also bigger businesses?
The Goods and Services Tax (GST) Act allows a business with annual turnover of under S$1 million to be exempt from paying GST. This seems to help a small business but is actually a disadvantage.
When a non-GST registered company supplies goods or services to a business, the latter is not allowed to deduct the purchase from its GST liability. The small business is compelled to reduce its price by the GST amount to remain competitive.
It would help small companies if a business customer is allowed to treat all its purchases as eligible for GST deduction, regardless of the supplier's status. This would not significantly dent GST revenue.
This would also benefit the entire business community by eliminating the need to issue tax invoices and keep a separate record of GST credits from eligible suppliers. The saving in accounting work and compliance cost for the economy could be significant.
This suggestion would need to be worked out in greater detail, but I believe that it is worth the effort to take a new look at our GST administration.
Tan Kin Lian
2 comments:
Mr Tan,
I am quite curious. Do you have a background in tax or accounting in general?
@8:57 am. Can you show your real name, if you wish to address a question to me?
I qualified as an accountant in the early 1970s, before I became an actuary.
But, to be honest, accountancy and taxation is not that difficult to understand for a person who is familiar with finance. We only need to apply our common sense.
I have spoken to senior partners of audit firms who argued strongly in favor of the GST system. I suspect that they had vested interest in having a complicated system - so they get more professional work. So, do you wish to rely on "experts"?
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