Tan Kin Lian's Blog: GST penalty for small business

Friday, January 22, 2010

GST penalty for small business

I wrote to Today Paper that a small business has to suffer a penalty under the current Goods and Service tax (GST). It has to pay GST on its purchases and is not able to recover the GST from its business customers and on its exports. This has forced many small businesses to "volunteer" to register for GST, even though the amount of GST payable is small. It causes administrative work for IRAS and compliance cost for small businesses to keep records to prepare and submit the quarterly GST returns.

To avoid this problem, I suggested that the the GST law be changed to allow business customers to treat al ltheir purchases as qualifying from GST, including the purchases from the small entities that are exempt from GST.

IRAS has replied that it is not able to offer GST credit for exempt entities who do not pay GST. This reasoning overlooks the fact that the exempt entity has to pay GST on many of its own purchases already. By taking a rigid position, IRAS is creating unproductive and wasteful work for small businesses and itself. Even the business customers have to keep separate records to segregate purchases from exempt and non-exempt suppliers.

IRAS did not contact me to discuss the issue before giving its reply. There is no attempt by IRAS to understand the issue from the point of view of the taxpayer. I hope that our authority can be more open for discussion and dialogue on important issues that affect the cost of doing business in Singapore.

Tan Kin Lian

8 comments:

Falcon said...: This is what we have in our bureacracies. Incompetent people who are too proud to learn from the practitioners and only know how to hide behind their desks in their air-conditioned bureaus dishing out template replies because they perceive that they have the govt behind them, not realising that their very actions are undermining the govt good intentions. Perhaps it is time that the govt relook at the hiring policies for these groups of complacent people as one of the ways to maintain their standing in today's society.; January 22, 2010 11:51 AM
Anonymous said...: My experience and intuition is that the authorities rarely bothers to seriously discuss and consider solutions, if the problem is deemed by the authorities to be inconsequential to affect the status quo.

By status quo, I refer to things like collection of tax revenue, maintaining high GDP, curtailing any overt threat to the ruling govt, ensuring critical mass of the population are still complacent & going with the flow.; January 22, 2010 11:54 AM
Anonymous said...: Maybe because they received too many suggestions and hence cannot call and speak personally to each and everyone. Hence don't speak to anyone, in order to give consistent treatment to all.

Another thing is as 11.54 am said, not affecting status quo, so don't bother so much.

Unless for the same matter, somebody protest with a placard on the streets! Then the action (from police, not IRAS) will be very swift and prompt. No doubt about that.; January 22, 2010 12:49 PM
Anonymous said...: They are miss manage the good intention of the policy.I come across other case.I am sick and tire now,however, I will continue to rise the matter.I though we must be faster,better & cheaper ???; January 22, 2010 12:55 PM
Anonymous said...: My friend, the top can only do so much. Their focus is Big picture, cannot micro manage and this kind of issue is Peanut thus no need attention.

Also Peanut issues like taxi goes into hiding before mid-night charge, low birth rate, 1/4 of the population is Foreign Talent, Minibond/Jubilee/High Notes etc,
as long as issue they cannot solve, tried but failed, doesn't affect their million-dollar salary or "not in the Ms radar", just sweep under the carpet. So what if it goes to Hong Lim Park, send in Petitionsssss. It isn't a bother. During the election, get close to 66.6% votes and the following year adjust minister salary upwards claiming victory on getting out of recession by using reserve to fund recovery as a ingenous, brillant and innovative idea from those millionairs.

As for me, once IRAS replied TKL letter, it is a fullstop and no one will reply anymore even if TKL have another 1,000 names petition.; January 22, 2010 1:03 PM
Anonymous said...: You cannot beat them, join them; January 22, 2010 5:31 PM
Anonymous said...: one day...one day we will surely win.; January 23, 2010 11:22 AM
Anonymous said...: In the next GE, I hope the abolition of the GST can be an election topic. Such a tax only serve to rob the poor and enrich the wealthy people !; January 25, 2010 2:26 AM