Review of GST Charges on Regulatory Fees and Prescription on Non-taxable Fees in Subsidiary Legislation

Parliamentary Question by Mr Liang Eng Hwa:

To ask the Prime Minister and Minister for Finance (a) what is the status of the review of the charging of GST on regulatory fees by the Ministry and IRAS as well as the prescribing of non-taxable fees in subsidiary legislation; (b) whether any fees will become newly taxable as a result of the review; (c) how may this impact the public; and (d) what is the progress of the GST refunds on these fees. 

Parliamentary Reply by Second Minister for Finance, Mr Chee Hong Tat:

MOF has been working closely with Government agencies since the GST (Amendment) Bill 2024 was passed in April this year to review the fees charged by Government agencies, in order to ensure the correct GST treatment. 

The review has been completed. Fees that are non-taxable, such as those which grant approval for the conduct of a regulated activity, have been prescribed into the Non-Taxable Public Agency Supplies (NTPAS) Order since end-September. We will periodically update the NTPAS, when new non-taxable fees are introduced, or existing fees abolished. 

All fees not prescribed in the NTPAS are taxable. These comprise the vast majority of Government fees that are already taxable, like the rental of public sports facilities and parking fees, and around 250 fees which are newly taxable. 

Examples of the newly taxable fees are administrative processing fees for the application of a company name, examinations for plumbing or fumigation licences and other inspection fees related to the conduct of business operations, as well as replacement fees for a lost NRIC or work pass. Most of these fees are typically borne by businesses which can claim the input GST from IRAS, if they are GST-registered. 

Government will absorb the GST on these 250 newly taxable fees in the first instance, as well as impose a fee freeze until end-2025. Agencies are also reviewing their fees and charges and considering ways to streamline processes or manage underlying costs to stave off the need for fee increases after end-2025. Unavoidable fee increases will be phased in gradually after end-2025.  

On refunds, MOF earlier estimated that around $1.5 million in GST was wrongly charged to individuals and non-GST registered businesses per year. Across 5 years, this amounts to around $7.5 million. Since then, we found that a larger proportion of fees were found to be charged to GST-registered businesses, who would have already claimed the GST charged as input tax. As such, the revised figure on wrongly charged GST is around $1 million per year, or $5 million over 5 years. 

Agencies have notified all taxpayers, where records are available, and are also reaching out to affected taxpayers to process the refunds. Of the $5 million, we have refunded around 45%. Eligible taxpayers who have yet to provide their relevant details to the agencies may wish to do so in order to receive their refunds.

The Government is committed to upholding high standards of governance and integrity. Following the discovery of the wrongful charging of GST on Government fees, we moved swiftly to rectify it by working closely with agencies to assess the GST treatment of their fees and making clear the list of non-taxable fees via legislation. This is a better system moving forward, which will provide greater clarity on the GST treatment of Government fees.