Goods and Services Tax (GST) For 18 Government Fees To Be Refunded

All six agencies involved will begin refunds to taxpayers from March 2024

1.   In November 2023, the Ministry of Finance (MOF) discovered inconsistencies in the application of Goods and Services Tax (GST) on certain Government fees during an internal review of the GST treatment on Government fees and charges. MOF concluded the review in January 2024 and found that 18 fees across six agencies were wrongly charged with GST.

2.   In general, GST would be charged on services rendered by Government agencies, for example, fees for the use of public sports facilities or rental fees for hawker stalls and exhibition spaces. However, GST should not be charged on services which are regulatory in nature.

3.   The 18 fees were initially deemed by agencies to be processing fees, but on review, were found to be regulatory in nature. For example, an agency had charged GST on the application fee for a licence, but had not charged GST on the licence itself. The correct treatment should be to not charge GST on both the application fee and the licence fee.

4.   MOF and the six agencies apologise for the erroneous charging of GST. All agencies have taken immediate steps to cease the charging of GST on the affected fees from today.

5.   The 18 fees apply to both individuals and businesses. They include GST-registered entities who would have claimed the GST paid out as input tax previously in the course of their business, and so would not be impacted. But individuals and non-GST registered entities are not able to claim input tax. The amount of wrongly charged GST for this group is estimated to be about $1.5 mil per year. The vast majority of the transactions involve GST of $5 or less per transaction. Please refer to Annex A for a list of the 18 fees.

6.   The Government will refund these taxpayers the GST charged for the fees. We will make the refund process as seamless as possible. From March 2024, the agencies will reach out to the affected taxpayers and refund, with interest, the GST that had been paid based on available records. All GST-registered entities are required by law to keep records for up to 5 years. The agencies will therefore have a record of the taxpayers who transacted within the last five years (i.e. since 1 January 2019). Beyond the 5-year period, agencies will make proactive refunds where records are available. If affected taxpayers are not contacted by agencies by 30 June 2024, they can reach out to the agencies to seek a refund. Please refer to Annex B for the agencies’ contact information.

7.   The current approach is for government agencies to assess and decide whether or not to impose GST on their fees based on broad principles and guidelines set out by MOF. There are more than 5000 government fees and charges, and this approach can result in mistakes by agencies – be it to wrongly charge GST, or even to miss out on applying GST. To minimise the risk of such errors in the future, MOF will make legislative amendments to the GST Act to clarify the treatment of GST for such fees, and to prescribe a list of regulatory fees where GST should not be charged.

8.   The Government is committed to upholding high standards of governance and integrity. We continually review our processes and systems, and tighten them where necessary. Where errors are discovered, we take immediate action to rectify them.

Issued by:
Ministry of Finance
Singapore
14 February 2024