Distinguished Delegates,
Ladies and Gentlemen,

Introduction

A very good morning to all of you. It is with great pleasure that I warmly welcome you to the IRAS-OECD Regional GST/VAT Conference. This is the very first GST/VAT-focused conference in the Asia-Pacific region and Singapore is privileged to have the support of the OECD in making this possible, as part of our ongoing engagement under the OECD Global Relations Programme.

I am also very happy to have the Tax Academy of Singapore co-organise this regional conference with us, to bring together participants from the business community, tax practitioners and delegates from tax administrations in Asia-Pacific to share their insights and experiences on GST/VAT.

GST in the Asia-Pacific Region

The spread and evolution of Value Added Tax (VAT), or more commonly known as Goods and Services Tax (GST) in this region, has been gathering speed in the recent years. The recognized capacity for GST/VAT as a valuable source of government revenue has drawn several countries to introduce the tax as a complement to, and increasingly as a substitute for, the traditional direct taxes. Some Asia-Pacific countries that have been administering consumption taxes for a while are now looking towards increasing the standard GST rate as part of their revenue raising efforts and fiscal consolidation strategies.

At the same time, there is the larger context of increased global interconnectivity and significant increase in the volume of cross-border transactions. GST has the advantage of being neutral towards international trade. It is a tax on final private consumption and generally relies on the destination principle to determine the appropriate place of taxation. While it is easier to identify the location where physical goods are delivered, services are essentially intangible and the place of supply is not always self-evident. This creates risks of under taxation and loss of revenue for governments while businesses could experience higher compliance costs and uncertainty when transacting in more than one country.

The OECD’s Work

The OECD hopes to provide greater clarity on this subject by developing the draft OECD International GST/VAT Guidelines. The Guidelines aim to become a set of internationally agreed principles for the GST treatment of common types of international transactions. This is a concerted effort by the OECD to address complex issues, including double taxation and double non-taxation.

Singapore, together with other countries, is contributing towards the development of the GST/VAT Guidelines. Besides participation in the OECD Working Party 9 on Consumption Taxes, we are also a member of the Steering Committee for the Global Forum on VAT, which was set up by the OECD in November 2012 with the objective of developing and promoting best practices in the design and operation of GST/VAT.

Conclusion

The conference today is an opportunity to bring the global effort in developing a consensus on the application of VAT to cross-border trade closer to home, here in the Asia-Pacific region. It explores the key trends of and challenges faced by governments and businesses in administering GST/VAT as well as the technical issues arising from international trade in services and intangibles. I welcome all of you to participate actively in the discussions over these two days.

With that, I wish you all a fruitful and enjoyable conference. Thank you.