SINGAPORE — Ahead of Budget 2018 which will be delivered next month, the business community here has urged the Government to impose a tax on e-commerce to “level the playing field” — a call backed by a KPMG report which said such a move makes “for far better math” compared with raising goods and services tax (GST) across the board.

Meanwhile, Singapore-based e-commerce companies told TODAY they have been in discussions with the Inland Revenue Authority of Singapore (IRAS) on the issue.

Speaking to TODAY, Association of Small and Medium Enterprises (ASME) president Kurt Wee said on Tuesday (Jan 16) that “tax paying” brick-and-mortar retailers are affected by the rise of e-commerce, and there is a need to “create a more fair playing environment”. The association will issue an official press statement later this week to propose an e-commerce tax where GST will be levied on online retailers as well, he said.

Mr Wee said that both overseas and Singapore online retailers should be made to collect GST from customers. ASME is calling for the S$400 threshold - buyers need to pay GST if they buy more than S$400 worth of goods online - to be removed, he said. “There is a significant portion of consumers not paying GST, as they don’t need to pay that if they buy less than S$400 from the overseas sites,” Mr Wee reiterated.

On Tuesday, consultancy KPMG released its annual pre-Budget report which was based on a survey of 126 companies. Among the proposals, it suggested — as an alternative to a GST hike — that the Government impose a tax on e-commerce and digital services, in line with the global movement.

“Given that the value of online spending is set to increase as consumers make a sweeping shift from brick and mortar shopping to online buying, the taxation of e-commerce and digital services makes for far better math,” said KPMG.

In November last year, Senior Minister of State (Finance and Law) Indranee Rajah said that the Government was looking at widening levies on e-commerce to broaden its tax base.

A 2016 report by Internet giant Google and Singapore state investment firm Temasek Holdings had projected that within a decade, the size of Singapore’s e-commerce market will grow more than five times to US$5.4 billion (S$7.5 billion).

A spokesman from Lazada, which also owns online grocer Redmart, said the company “welcomes and supports initiatives that will make it efficient and fair for Singapore consumers and merchants to shop and sell online”.

He added: “Where taxes are applicable on products offered by sellers, we ensure that these sellers comply with the local laws and regulations. For taxes which are still under consideration by the Iras, we have not taken active steps until the laws come into effect. But we will fully comply when new laws are passed.”

The KPMG report had polled the companies on their views on taxation measures for the coming Budget. It also put forward suggestions for greater support for companies amid the economic restructuring, among other things,

According to the report, some respondents felt there should be no “urgent need” to increase direct or indirect taxes. KPMG Head of Tax Mr Chiu Wu Hong said: “They felt Singapore still have growth, and there are still reserves, so they don’t feel we are in (such) dire straits to increase tax rates at the moment.”

Mr Wee added: “In general, businesses would not want any taxes to be increased. GST tends to dampen consumption patterns, and as for corporate tax… we’re already in a high cost business environment, so if we increase corporate tax, it disincentivises businesses to generate margins.”

Instead, the respondents called for more tax support, with 44 per cent saying that tax incentives should be enhanced for firms which base their headquarters in Singapore. They also suggested that additional tax support be put in place to offset the costs in implementing new technology and innovation.