Goods and Services Tax in Singapore: Rationale and Implications

Goods and Services Tax in Singapore: Rationale and Implications

Sam Choon Yin (2003)



On 1 January 2003, Singapore raised its goods and services tax (GST) rate from three percent to four percent. Also know as the value added tax (VAT) in some countries, the GST was first introduced in Singapore on 1 April 1994. France was the first country to implement the GST in 1954. In 1983, 21 out of the 24 OECD countries had implemented the GST. The United States is the most notable nation without a VAT on consumer expenditure. So far, about 80 countries have not implemented the value added tax (VAT), covering mostly the small island economies in Oceanic and the Caribbean, Middle East and African countries. The GST rates numbered more than 20 percent in Denmark, Hungary, Sweden, Austria and Norway, followed closely by France, the Netherlands, United Kingdom and Germany. Australia introduced the GST in 1998 at a rate of 10 percent. The GST rate in Singapore is low in comparison to these countries. In this essay, I will briefly discuss the rationale for introducing the GST from the Singapore’s perspective and the impact of the GST on the economy. But let me first explore the general nature of the tax to gain a better understanding on what GST is really all about.


What is GST?

GST is essentially a tax on consumption. This implies that one pays tax in the form of GST only when he or she consumes. This is in contrast to direct taxes like income tax or property tax which taxes on income earned. GST is a form of indirect tax because the tax collection from the government is not directly obtained from the taxpayers. The consumers pay taxes to the government through the sellers. The sellers in other words collect the GST from the consumers on behalf of the government. Whether the sellers or the buyers bear more or less of the taxes depend on the price elasticity of demand and supply (more about this later). The other thing to note is that GST is an ad valorem tax. Ad valorem tax is a kind of tax that is expressed as a percentage of the value of the good purchased. For example, a GST of four percent implies that a good valued at $100 is entitled to GST payment equivalent to $4. This is in contrast to the other kind of tax known as specific tax. The specific tax is expressed in monetary terms per unit of the good. A tax that is expressed as say $0.50 per unit is an example of the specific tax. 

It may be useful at this juncture to distinguish between the GST and retail sales tax (RST) and the seriousness of tax evasion in these two forms of taxes. Although both are consumption taxes and in principle the two taxes provide similar revenue, the loss of revenue through evasion is likely to be more substantial under the RST as compared to the GST. The reason is simple. For RST, tax revenue is collected at a single point, that is, when goods are sold to the customers. If the retailers evade taxation, the government loses the full tax liability of the sales. GST on the other hand, is taxable on every stage of the production process. Although tax evasion is still possible, the magnitude is limited. For instance, if the retailer evades taxes, the loss of revenue is only associated to the liability connected with the value added creation process at that stage. It is still possible to collect tax revenue from companies in the preceding and succeeding stages of the value chain. However, one should note that the GST is administratively more demanding for both the taxpayers and the administrators. Under the GST system, tax administrators have to take care of a relatively larger number of taxpayers, as compared to the RST system.



            Singapore pursues a policy of including as many taxpayers as possible. The tax philosophy of Singapore is that the tax base should be as wide as practicable to drive home the message that the costs of public services have to borne by the citizens. This is evident from the number of tax brackets in the personal income tax structure. In 1987, the personal income tax rates ranged from 3.5 percent to 33 percent with 13 brackets. At present, the rates range from 2 percent to 28 percent with 10 income brackets. With the introduction of the GST on 1 April 1994, a significant number of taxpayers have been removed from the income tax net mainly due to the generous income tax rebate and personal relief. This however does not imply that the percentage of taxpayers has declined. More people in fact are paying taxes under the GST system. Even the young whom have not entered the labor force and the old whom have left the workforce are not excluded from paying GST. As long as one consumes, he or she is likely to have paid the tax. One may see that the GST is a fairer tax since everyone is involved. In the GST form, the whole population contributes to the tax revenue of the government. The difference is that, instead of the working population paying direct taxes to the government, the residents in Singapore are paying indirect taxes in the form of GST. The government in other words has moved from collecting direct taxes to indirect taxes.

            The reason for the transition is to enhance the level of competitiveness in Singapore. It is the intention of the government to lower the direct taxes like the personal income tax and company tax to compensate for the high land and labor costs. The government perceives that with lower direct taxes, more foreign talents and foreign companies would work and invest in Singapore respectively. Lower direct tax rates of course also benefit the local residents and the firms since they are entitled to the newer and lower tax rates. It should be noted though that tax rates is not the only factor considered in determining the level of investment and intensity of work. Companies care about the labor cost, rental, industrial relations, infrastructure standards, the economic environment and stability of the government as well. While lower tax rates are welcomed, it is not the only factor considered. Companies will still fail to invest in Singapore or shut down if the other factors are non-favorable. The recent failure of ‘One .99 Shop’, citing high rental costs, did not signal well in investing in Singapore despite the low company tax. Likewise, a foreign worker may consider the cost of living and cultural adaptation as relatively more important than direct taxes when deciding whether he or she should work in Singapore. It is therefore wiser to look at the whole package incorporating other factors besides tax rates when one talks about enhancing Singapore’s level of competitiveness, a fact that is well recognized by the Singapore government.

The introduction of the GST corresponds to lower direct tax rates. The top personal income tax rate in Singapore was reduced from 33 percent to 30 percent while the company income tax rate was reduced to 27 percent from 30 percent with effective from the Year of Assessment 1994. This basically lowers the direct tax burden of the working population and companies operating in Singapore. More recently, in the budget statement 2002, the Minister for Finance Lee Hsien Loong (who is concurrently the Deputy Prime Minister) reduced the corporate and top personal income tax rates from 24.5 percent and 26 percent respectively to 22 percent for the YA 2003. In this year’s budget statement 2003, the Minister did not change the rates but reiterated the government’s stance to further bring down the tax rates to 20 percent by YA 2005. The increased in the GST rate in 2003 was an effort to offset the loss of direct tax revenue as a result of these changes.

The government also offered rebates to the residents in Singapore to lower the direct tax burden of the working population. This essentially brought down the percentage of the working population from paying personal income tax. When GST was first introduced, a rebate of S$750 was provided to all the taxpayers and this figure was gradually reduced by S$50 each year until it reached S$500, and thereafter it remained at that level. As a result of the rebates, the proportion of labor in the income tax net fell sharply from 73 percent in 1995 to 23 percent in 1994. The main beneficiaries of the above were the lower income individuals with annual income of less than S$30,000. The proportion of taxpayers in this category fell from more than 50 percent in 1993 to just 6 per cent of the total employed labor force in 1994. While the government aimed to lower the number of individuals in the income tax, the number of taxpayers in the higher income group (defined as taxpayers with annual income of more than S$30,000 per annum), as a proportion of total employed workers, had increased marginally, from 16 percent in 1993 to 17 percent in 1994. These rebates were meant to soften the negative impact of introducing the GST.

To soften the impact of the recent increment in the GST rate from three percent to four percent, the government offered the Economic Restructuring Shares (ERS) and other rebates as spelt out by the Minister for Finance Lee Hsien Loong in his recent budget statement 2003. The ERS amounts to S$3.6 billion to be given out in a bond-like system over three years. Applicable only to Singaporeans, a total of between $600 and S$1,400 of shares will be distributed in cash form or in the form of dividends, a choice to be decided by the individuals themselves.

The other rationale for introducing the GST and increasing its rate is that the GST is basically a tax on consumption, and not applicable to savings and investments. The argument for GST then is that, with the GST, individuals will be encouraged to save more therefore leading to more investments. The argument is not a strong one in the case of Singapore. There are two reasons. First, as an attempt to retain the domestic funds in Singapore and to attract back funds currently held offshore, the government has already exempted interests earned from savings, current and fixed deposits in the local bank, the Post Office Savings Bank (POSB), from tax. The Minister for Finance announced this in the budget statement 2003. Currently, depositors with the POSB enjoyed tax exemptions on the interest from the first S$100,000 earned. With effect from YA 2004, a further exemption on the interest exceeding S$100,000 will be given to the standards savings, current and fixed deposits in the POSB. Exemptions for the full amount of these deposits will be rewarded with effect from YA 2006. Even without these exemptions, one should note that tax on interest represents only one of the factors considered when one wants to decide whether he or she should save more or otherwise. The interest rates, inflation rates, exchange rates, and the net benefits of other means to use the excess funds are some of the other important factors that a potential saver would take into consideration. Second, high savings in Singapore have already been incurred through the compulsory savings in the individuals’ Central Provident Funds accounts. If the notion that Singapore residents are ‘assets rich and cash poor’ is right, then it is unlikely that the level of savings would respond very much to tax rates. It would be difficult and not very practical for them to increase their savings further even if the interests earned through savings are tax-exempt.

             Earlier, I noted that one of the rationales for introducing GST is that it is deemed to be a fairer tax whereby everyone contributes to the revenue funds of the government. This is in contrast to the direct taxes where some individuals or companies are prone to tax evasion. For example, it is relatively easy for self-employed persons to under-declare their earnings to the tax authority in minimizing their tax liabilities. It is not easy for the tax authorities to verify the statements submitted by the self-employed persons. Tax evasion is deemed undesirable from the society’s point of view. Lower revenue collection affects the quality and quantity of the public services offered. If the level of public services were to be maintained, then higher tax rates would have to be imposed, therefore imposing higher tax burden to the rest of the society. Indirect taxes like the GST helps to tackle the problem to some extent since the GST is paid on consumption. Even the self-employed in this case are taxed as long as they spend their money on consumption. While the argument is valid, the problem is that evasion of GST tax is also likely to take place. Why is this so? GST could increase non-compliance to the tax regulations among the companies. One reason is that higher compliance costs are incurred. More paperwork is involved, as the companies have to take the extra effort to account for the purchases. As pointed out in Gale (1999), compliance costs to GST regulations are high because the GST is ‘not integrated with business income taxes for auditing and control purposes’ (p. 479). Moreover, some smaller businesses may see the GST as a drain on the amount of resources available for distribution or reinvestment, instead of something that is added on to a selling price. Visible costs have to be incurred by the companies to understand the workings of the new tax system, to keep track of their transactions (for claimant purpose) and to familiarize their businesses with the tax. The above costs of compliance are particularly prevalent to business owners with relatively modest income.

            Administratively, detecting GST tax evasion is not easy. For one thing, household purchasers do not usually keep or need receipts upon transactions for tax purposes, therefore hindering attempts to double-check the submissions made by the companies. Detecting GST tax evasion is perhaps more effective at the custom points where goods are being brought into the country. Custom officers could detect GST evaders who try to bring in more goods that what is declared in the custom permit. A successful case of detecting GST evaders was reported in 1998 in the Singapore press. The report highlighted how a businessman had attempted to evade GST taxes (in November 1998) by loading more than the recorded (declared goods) from Indonesia. The custom permits did not cover the consignments brought in. The court found the offender guilty of evading GST since July 1997, amounting to S$310,199, and imposed a fine on him totaling S$1.55 million, which comes out to about five times of the amount of GST evaded (The Straits Times, 16 July 1999). Tax officials also cannot rule out tip-off from third parties or informers for valuable information to fight tax evasion.

In the case of Singapore, my view is that the impact of the GST on the severity of the tax evasion is not likely to be severe. There are several reasons. First, a single-tax rate system (currently at four per cent) is adopted in Singapore. This should minimize the level of complications and costs of compliance. Second, the exemption granted to companies, with annual turnover of less than one million dollars (SGD) from GST also dampens the severity of tax evasion. The high threshold exempts almost four-fifth of all businesses including small players like hawkers, retail, provision shops and self-employed businesses, which have the highest tendency to evade and avoid tax payments.[i]

Third, the GST rate of four per cent is not sufficiently high to influence the companies in undertaking the risk to evade tax payment. Comparatively, the value-added tax in Singapore is lower than the OECD countries, which ranged from five per cent in Japan to 25 per cent in Denmark, Hungary and Sweden. Fourth, given that GST is a multi-stage tax, the probability of detecting GST tax evaders is higher, therefore deterring companies from under-declaring and/or non-declaring their levels of income. This is facilitated by the adoption of information technology in helping the tax administrator, the Inland Revenue Authority of Singapore (IRAS), to account for the taxes.

Fifth, the exemption on GST granted to financial transactions also helps to mitigate the problem of non-compliance, given the difficulty involved in identifying the value added produced by the financial institutions, partly because of uncertainty over the true nature of the services provided. Sixth, the GST tax system in Singapore is more certain and minimizes complications since all goods and services are taxable with the exception of financial services[ii] and the sale or lease of residential properties.[iii],[iv] The government basically recognizes that providing exemptions to items (like the essential goods) from the GST is not wise after taking into consideration the potential complications involved in distinguishing between those items that should be exempted and those that should not. Providing exemptions to as little items as possible is perceived to be more ideal in minimizing complications in administering the tax. The Singapore government instead provides offset package to offset the negative impact of the GST rather than relying on the exemptions option. Seventh, not all imports require payments at the border or at the point of importation. Exceptions, for instance, are given to traders that are under the Major Exporter Scheme and Bonded Warehouse Scheme, therefore reducing congestion problem along the borders, and therefore the incentives to evade taxes.



This section touches on the impact of the GST on the Singapore economy. I will first discuss the negative impacts of the GST followed by the discussion on a positive impact.

One of the problems with the GST is that the poorer individuals are likely to pay a higher proportion of their income in GST tax as compared to the rich. In the economics jargon, we say that the GST is regressive. A regressive tax is one where the amount of tax collected from the poor as a proportion of the income earned, is greater as compared to those paid by the rich. A tax is said to be regressive if the average tax rate (ATR) decreases as the level of income of the individuals’ increases. The GST is an example of a regressive tax. Consider two individuals A and B who earned the annual income equivalent to $50,000 and $100,000 respectively. Assume that they purchased an item costing $1,000 each. With the GST rate at four percent, the amount of tax paid in the form of GST amounts to $400 applicable to both individuals. The amount of tax paid accounted for 0.08% of the income for individuals A, while for B, the amount of tax paid only accounted for 0.4% of his or her income. The less well off individual A paid a higher proportion of his or her income in the form of GST, as compared to the better off individual. A regressive tax therefore is more unequal in nature such that the poor are being taxed more than the rich.

The regressive problem faced by the consumers is more serious in the case where the goods concerned are relatively more price inelastic. Examples of price inelastic goods include food, clothing, medicine and cigarettes. The reason is that with the GST, the suppliers would reduce its supply therefore potentially raising the price of the goods. Since the good is price inelastic, it would imply that it is difficult for the consumers to leave the market, which has become unattractive as a result of the tax. The consumers end up bearing a higher percentage of the tax as compared to the suppliers.[v]

As part of the effort to soften the impact of the GST on the residents (particularly those from the lower income group), the Singapore government offers the offset package to its residents which includes the Economic Restructuring Shares for all adult Singaporeans, rental rebates for HDB flats and rebates for HDB Service and Conservancy Charges (S&CC). It should be noted that the government has officially announced that the main intention of introducing the GST and increasing its rate is not to raise additional revenue for the government, but to offset reduction in the direct taxes aimed to enhance Singapore’s level of competitiveness. The offset packages were expected to be more than sufficient to soften the negative effect of the GST on its residents.

Introducing GST is indeed inflationary where the general price levels are expected to increase. Although the GST is imposed on the sellers, the sellers can pass on some of the tax burden to the buyers in the form of higher prices. The increment, as recorded in the official statistics like the consumer price index and GDP deflator, however is one-off. In Singapore, the inflationary pressure did not appear to be significant when the GST was first introduced in 1994. Despite the imposition of the GST at three percent, the consumer price index increased by less than two percent in 1994 and 1995. With only a percentage jump in the recent attempt to increase the GST rate, the government did not expect the higher GST rate to have any significant effect on the general price level.

One of the problems with the introduction of the GST is the potential unfair increment in the price of goods and services from the retailers. The profiteering incidence is likely to exist more severely in the neighborhood stores where the retailers would take the opportunity of the GST to raise the prices charged more than the stipulated increased in the GST rates. In Singapore, following the government’s announcement from the government in raising the GST rate from three percent to four percent, the government has set up the Committee on Profiteering and Inflation to look into any complaints from the residents over unjustified increased in the prices. Headed by the Minister of State in the Prime Minister’s Office, Chan Soo Sen, the committee did receive complaints from residents over some incidences of profiteering as reported in the local media. However, the committee was not able to do much in tackling the problem, highlighting the fact that the sellers had the right to raise their prices deemed necessary and that it was really up to the consumers to decide whether the prices charged were fair and reasonable or otherwise. It noted that the consumers had the option not to buy from the sellers which had engaged in profiteering. While this is true, the buyers would be worse off in the process. Not only that they might end up paying higher prices if they failed to identify those companies engaged in profiteering but the buyers would incur additional searching costs in search of those sellers that had not engaged in profiteering.

The introduction of the GST imposes a negative impact on the fixed income earners. Basically a tax on consumption, the GST is paid whenever consumption is incurred. And GST is inflationary. The fixed income earners in this case are relatively worse off since they would have to pay for something that is more expensive over the years while the income received are fixed in nature. Essentially, the real earnings fall meaning that with the same amount of income received, the fixed income earners are not able to purchase the same quantity of goods and services. Instead, they will get a smaller quantity. The reason being this is that the income received is not protected against inflation. Examples of the fixed income earners include pensioners and annuity holders.

The introduction of the GST may also increase the size of the underground economy (UGE) through the consumers and taxpayers. The UGE is defined as the part of the national output that is not officially recorded. For example, some companies may deliberately under-declare the production in the preceding year from the government authorities in their attempt to minimize their tax liabilities. As a result, the reported national income is less than the actual national income leading to problems like policy ineffectiveness since policies introduced are based on the government’s analysis on the reported income (which is underestimated) failing to take into consideration the hidden component of the national income. How is GST linked to the growth of the UGE? The perceived unhappiness among the consumers for having to pay more for the goods and services consumed with the implementation of the GST could stimulate them to participate in the UGE. The consumers may engage in the irregular labor market to earn some extra income stimulated by the increase in prices. Taxpayers may retaliate and attempt to ‘adjust their accounts’ and/or under-declare the income earned to re-coup the costs incurred in filing and tracking the transactions (for business entities) and higher prices paid for goods and services (for non-business entities).

The implementation of the GST also complicates tax administration to the tax regulators. The tax regulators have to provide trainings and information on GST compliance to the companies at least in the initial stage and to newly incorporated companies. More emphasis and resources are likely to be spent within the Inland Revenue to audit and monitor the records and accounts provided by the companies. Over time, the administration problems and costs may decline as the tax regulators gain more and more experience on the job. However, this may be true only if there is an effective in-house training or its equivalence available for its internal staff and/or the staff turnover in the Inland Revenue is not excessive - at least to prevent the deterioration of standards and services. In the case of Singapore, the use of the Internet has facilitated the tax administrator in Singapore the IRAS in administering its work. The use of the Internet would help in a great way in minimizing tax administration problems. It is the intention of the IRAS to minimize the cost of compliance to the tax regulations where the taxpayers can now file their tax returns at the comfort of their homes and offices. A lot of the tax information can now be obtained from the IRAS’s website. This is part of the IRAS overall philosophy in promoting voluntary compliance. In conjunction with the philosophy, tax forms have been simplified to encourage greater compliance from the businesses. For example, sole proprietors and partnerships need to submit only a four-line statement in their tax forms indicating their turnover, gross profit/loss, allowable deductions and adjusted balance. For the Year of Assessment 1999, company tax return (Form C) has also been simplified. The number of pages of Form C for the Year of Assessment 1999 has been reduced from eight pages to six pages. Furthermore, businesses with turnover of less than S$500,000 need no longer submit their statement of accounts with their tax returns. Also, the IRAS takes the effort to inform the public about its latest changes in the tax system so as to minimize uncertainty. This is done via the media and its publication COMPASS. In addition, the IRAS conducts seminars and holds dialogues with trade associations/professionals and field audits to clarify tax laws with taxpayers, obtain feedback and educate the taxpayers.

So far, the discussion concentrates on the negative aspect of the GST. It is logical at this stage to examine the positive impact of the GST on the Singapore economy. Clearly, a positive aspect of the GST is its ability in raising Singapore’s level of competitiveness given that the introduction of the GST and increment in the GST rates correspond to the lowering of direct taxes. The expected inflow of foreign direct investments is likely to create employment opportunities to the people therefore contributing to lower unemployment rate (bearing in mind that tax rate does not represent the sole factor in consideration). With the government’s intention in attracting high value added industries in operating in Singapore, more highly paid jobs will be offered to the residents of Singapore, contributing to higher standards of living. Of course, with the inflow of the FDI, the balance of payments account will also improve further increasing the already high foreign reserves in Singapore. These reserves act as safeguards in Singapore against uncertainties in the economic environment. The government can use these reserves to help the residents at times of economic downturn. These reserves can also be invested in financial instruments (say by the Government Investment Corporations) to further build-up the long-term assets of Singapore.



            At four percent, the GST rate in Singapore is one of the lowest in the world. The government introduces the GST to offset the loss in revenue as a result of the reduction in the direct taxes like personal income tax and corporate tax. The latter were reduced to increase Singapore’s level of competitiveness. Efforts were made to educate the people on the rationale in introducing the GST in 1994 and raising the GST rate by one percentage point first announced in 2002. The media coverage on parliamentary debates over the issue was extensive. The newspapers covered views and responses from the public and relevant authorities to better inform the public on the rationale and impact of the GST in Singapore. Some understood the need of economy to have the GST but many could not accept in 2002 over the government’s decision in raising the GST rate at the time when the economy was suffering from a downturn and many were without jobs. The general sentiment was that the government should delay the increment in the GST rate until the economy recovers. The downpour of the negative feelings compelled the government to reconsider its initial recommendation in raising the GST rate by two percentage points to five percent. The government obviously took into consideration the sentiments of the man-in-the-street when it decided to revise its numbers. In the end, it was decided that the GST rate should increase by one percentage point instead of two on 1 January 2003 with the next increment of the other percentage point on 1 January 2004. Given the current economic uncertainty as a result of US-led war against Iraq and the outbreak of the Severe Acute Respiratory Syndrome (SARS) both in March 2003, it remains to be seen whether the government of Singapore would proceed with the plan of increasing the GST rate to five percent in the year 2004.



1.         Asher, Mukul (1993) ‘The Proposed Goods and Services Tax (GST): Implications for Singapore’s Fiscal System’, Asian-Pacific Tax and Investment Research Centre Bulletin, Vol. 11, No. 6, June 1993.

2.         Gale, W.G. (1999) ‘What can America Learn from the British Tax System’, in Slemrod, J. (editor) Tax Policy in the Real World, Cambridge University Press, UK.

3.         Sam, Choon Yin (2002) Elements of Economic Environment. (unpublished book).





[i] The threshold imposed by Singapore (at $1 million annual) before GST payment is required, is relatively higher than Japan (0.048 million), Indonesia (0.048 million), New Zealand (0.025 million) and UK (0.085 million), which had also implemented the consumption tax. Most provision shops, retail shops, hawkers and taxi drivers in Singapore would be exempted from paying GST.


All figures are in Singapore dollar and based on the exchange rate of USD 1 = SGD 1.60 as at end-March 1993 (Asher, 1993).


[ii] Financial services involve mainly banking services, dealing in shares, insurance and related brokerage services. Providers of the financial services charge no GST to their customers. The providers of financial services cannot claim the VAT from goods and services they purchase from their suppliers. As a result, the cost of financial services provided includes the VAT paid to the suppliers. This is sometimes known as ‘hidden’ or ‘sticking’ tax.


[iii] This is unlike the UK where different GST rates are imposed on different goods. For example, special treatment is given to items like food, new dwellings, passenger transport, books and newspapers, which are zero-rated goods. This makes defining the type of goods in a particular good category difficult.


In Singapore, all imported goods (whether for domestic sales or re-exports) are taxable unless they are specifically given GST relief by the Comptroller of GST. The GST is collected by the Customs and Excise Department at the border or at the point of importation with the exception of traders that are under the Major Exporter Scheme and Bonded Warehouse Scheme. If the imported goods are to be used in the traders’ taxable activity, the taxable traders are allowed to recover the GST from the Comptroller. Otherwise, the traders (or final consumers) are not allowed to recover the GST from the Comptroller.


[iv] Major Exporter Scheme and Bonded Warehouse Scheme are two schemes introduced to help exporters.


In the Major Exporter Scheme, major exporter with export sales in the preceding year exceeding 51 per cent of the total sales, may not be required to pay GST on the imports at the point of importation. The scheme aims to alleviate administrative and cashflow problems that the companies may face. If the companies are not able to meet the export percentage criteria, they are still allowed not to pay the GST on importation provided that a bank guarantee is submitted to cover the GST payable on imports for one prescribed accounting period.


In the Bonded Warehouse Scheme, no GST is charged on any goods transferred from the Free Trade Zone and stored in a bonded warehouse. GST is only charged if the goods are removed from the warehouse for the local market. GST is not charged if the goods are removed from the warehouse for the purpose of re-exporting.


[v] See Sam (2002; Chapter 6) for a more thorough discussion on tax incidence.