GST-Exempted Goods And Services In Asia-Pacific Countries

In the aftermath of Budget 2018, Senior Minister of State for Finance and Law Indranee Rajah said that a GST hike to 9% is the only way to give Singapore a “sustained revenue” to help cover our expenses.

And she might have a point. After all, most GST/VAT rates in Asia-Pacific hover around 10%, as Channel NewsAsia helpfully points out.

But that’s only one side of the story.

Let’s take a closer look at Asia Pacific countries, and their various ways of removing GST for certain products, based on KPMG’s 2017 guide to indirect taxes.

Note that goods and services mentioned below are non-exhaustive, but we’ve only featured the more notable entries.

1. Australia


Standard GST rate: 10%.

Zero rates: Most groceries, including breads, breakfast cereals, meats for human consumption, fruit, and vegetables. Services include most medical and health products, childcare, and most educational courses.

Other notable taxes: Luxury car tax, fuel tax

2. Cambodia


Standard VAT rate: 10%.

VAT-exempted: Certain medical and dental goods and services; state-owned public transport; and educational services.

3. China


Standard VAT rate: 17%.

China uses a complicated tier system of reduced rates, depending on type of goods and service. Here’s a brief, non-exhaustive overview of the system, based on the VAT rate:

3% VAT: ‘Small-scale taxpayers’ without sophisticated business, or whose turnover is below certain thresholds.

6% VAT: ‘Modern services’ e.g. research, information technology services, and cultural and creative services; financial and insurance services; and ‘lifestyle services’ e.g. education, healthcare, entertainment, and food and beverage.

11% VAT: Transportation services; basic telecommunication services; sale of food grains and vegetable oils.

VAT-exempt: Agricultural products; contraceptive drugs and devices.

Other notable taxes: Consumption tax primarily for luxury goods;  various real estate-specific taxes, motor vehicle taxes and mining-specific taxes.

4. India


Standard GST rate: Goods and services are divided into 5 categories. The rates are 0%, 5%, 12%, 18%, and 28%.

0% GST: Bread; fresh milk, food, and vegetables; eggs; fresh meats.

5% GST: Packaged food items; frozen vegetables; medicines; all restaurants.

12% GST: Frozen meat products; butter and cheese; condensed milk.

18% GST: Biscuits; soap and shampoos; IT services.

28% GST: Luxury and sin products e.g. motor vehicles, cigarettes, and carbonated beverages.

5. Indonesia


Standard VAT rate: 10%.

Non-taxable goods: Basic commodities, e.g. rice, salt, and corn; food and drink served in hotels, restaurants and the like.

Non-taxable services: Medical health; education; food or catering.

Other notable taxes: Sales tax on luxury goods

6. Japan


Standard consumption tax rate: 8%.

Tax-exempt: Medical treatments provided under public medical insurance law; school tuition and examination services; services related to childbirth, burial, home help and welfare centers for aged and disabled.

Other notable taxes: Liquor tax; tobacco tax; gasoline tax.

7. South Korea


Standard VAT rate: 10%.

Tax-exempt: Various food products; various medical and health services; education services; tobacco below 200 Korean won per 20 cigarettes.

Other notable taxes: Liquor tax; individual consumption tax.

8. Laos


Standard VAT rate: 10%.

Tax-exempt: Certain medical services; vehicles for specific purposes.

9. Malaysia


Standard GST rate: 6%.

Zero rates: Fresh and frozen meat; eggs; vegetables; rice; noodles; medicine

Tax-exempt: Education services; child care; healthcare

10. Myanmar


Standard commercial tax rate: Generally 5%. Can range from 1-8% for certain items.

Tax-exempt: Basic food and medicines; educational services; public transportation

11. New Zealand


Standard GST rate: 15%.

Tax-exempt/zero rated: Financial services; land transactions.

12. Singapore


Standard GST rate: 7% (to be increased to 9% from 2021-2025).

Tax-exempt: Sale/lease of residential property.

Other notable taxes: Property tax, casino and betting taxes.

13. Taiwan


Standard VAT rate: 5%.

Tax-exempt/zero rated: Certain educational services and publications; sale of land.

Other notable taxes: Tobacco and liquor tax, luxury tax.

14. Thailand


Standard VAT rate: 7% (to revert to 10% by 30 Sept 2018).

Tax-exempt: Educational services; domestic transport; newspapers, magazines, and textbooks.

GST-Exemptions for necessities in Singapore?

Of course, what’s in practice in many of these countries may not be directly applicable to Singapore.

Most of the items listed  – subject to reduced rates, zero-rates (GST free) or exempted from GST – are usually essentials like bread, meats, milk, and vegetables.

However, as Singapore imports most of our necessities, implementing tax exemptions on essentials in a similar fashion may be far less viable in the long-run.

What do you think Singapore should consider making GST exemptions for? Let us know in the comments below.

Featured image from Incredible India.