We thank Mr Peter Chen for his feedback ("Level playing field for local firms"; 24 Sep 2013).

The goods and services tax (GST) is a tax on local consumption, and all imports are subject to it.

However, goods (including gifts) imported by post or by air are given GST import relief if the value is less than $400. The concession is given as we recognise that the compliance cost could outweigh the GST collection if every import, regardless of value, is subject to GST.

Countries with GST/value-added tax, like Australia and New Zealand, take the same approach.

Mr Chen's suggestion of allowing local companies not to levy GST for items priced below $400 will not be tenable. It will open up significant avenues for both local sellers and consumers to break their purchases into values lower than $400, in order to avoid GST.

Exempting GST based on value of goods per transaction will also complicate businesses' accounting systems and inevitably increase their compliance cost.

There are tax rebates and grants to help local companies cope with business costs and competition overseas. There are also various assistance schemes offered by Spring Singapore and IE Singapore to help companies enhance their capabilities and competitiveness.

Walter Lim
Director (Corporate Communications)
Inland Revenue Authority of Singapore