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Tourism event tax could be extended to Airbnb-style rentals in future

SINGAPORE — The amendments to the Cess Act — which were passed in Parliament earlier this week — could see persons who offer “travel or other event-related goods and services” being subjected to an additional business tax, if they benefit from key tourism events such as the Formula One Singapore Grand Prix.

SINGAPORE — The amendments to the Cess Act — which were passed in Parliament earlier this week — could see persons who offer “travel or other event-related goods and services” being subjected to an additional business tax, if they benefit from key tourism events such as the Formula One Singapore Grand Prix.

These could include property owners who rent out their units for short term accommodation (STA), for example. Previously, the Act only covered “tourist hotels, tourist food establishments and tourist public houses”.

The amendments came amid a separate ongoing effort by the Government to come up with a regulatory framework for short-term private home rentals.

Responding to TODAY’s queries, a Ministry of Trade and Industry (MTI) spokesperson on Wednesday (July 11) gave more details on the expanded scope, which targets “potential new beneficiaries” as business models evolve.

Noting that the Urban Redevelopment Authority is reviewing feedback from the public consultation exercise on STA — which concluded in May — the MTI spokesperson said that “entities offering STA could potentially be a beneficiary of a tourism event”.

Nevertheless, the spokesperson reiterated that there are “no current plans”  to impose cess on new categories of tourism event establishments.

Currently, only gazetted hotels are required to pay cess – of either 20 per cent or 30 per cent of total gross room revenue – during the annual F1 night race.

The changes to the Act allow the Government to expand the range of businesses that could be required to pay the additional tax in order to help defray the costs of organising the event.

Hotels currently contribute an average of about S$13 million yearly during the F1 period in September. The sum goes to the Singapore Tourism Board (STB), and supplements the Tourism Development Fund to support the costs of the F1 project, which costs the Government some S$80 million annually.

In March, MTI and STB held a public consultation on the proposed changes to the Act. Representatives from more than 20 hotels participated in an industry engagement session.

On the feedback received, the MTI spokesperson said most respondents sought to clarify the details of the proposed amendments, such as the “scope of persons liable to pay cess in the future, calculation of cess payable for rooms sold through gift vouchers or loyalty points and the date of implementation”.

“Their feedback and comments were considered and addressed during the engagement,” the spokesperson added.

Following the amendments, the Act states that the Government may order “every taxable transaction” connected to each tourist event to pay cess, including those for the use of the tourism event premises, accommodation, product or services.

During the debate on the Bill on Monday, Senior Minister of State for Trade and Industry Chee Hong Tat said the expanded scope will ensure the laws “can be applied fairly (even) as business models continue to evolve”, as he noted the emergence of “a greater variety of products and services that serve similar needs (to hotels, pubs and restaurants) in the tourism landscape”.

Non-Constituency Member of Parliament Daniel Goh cautioned against an “over-expansion” of cess collection, so as “to not inadvertently hurt local businesses”. He pointed out that some establishments which were seen to be benefiting from F1 actually made losses due to the road closures.

In response, Mr Chee said the imposition of cess will be done “in a judicious manner”. He also stressed that any collection “will continue to be targeted and calibrated, based on the current set of policy considerations”.

“In making the assessment, we are guided by the principle of our cess policy, which is to ensure that business groups which are likely to benefit commercially from a strategic tourism event would play their part in defraying the costs of organising these events,” he said.  

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