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Singapore government to refund taxpayers wrongly charged with GST for fees paid to six agencies

Ministry of Finance and the six agencies have apologised for the erroneous charging, and will commence refunds from this month

GST or Goods and Services Tax concept with a stack of coin and Singapore Dollar at the background
The government will refund taxpayers who were wrongly charged with GST for 18 government fees across six agencies. (PHOTO: Getty) (ThamKC via Getty Images)

SINGAPORE — From March, the Singapore government will be refunding individual and business taxpayers who were wrongly charged with the Goods and Services Tax (GST) for certain government fees paid to six agencies, the Ministry of Finance (MOF) announced on Wednesday (14 February).

The six agencies are: the Council for Estate Agencies (CEA), the Housing and Development Board (HDB), the Land Transport Authority (LTA), the Office of the Public Guardian, the Singapore Food Agency (SFA), and the Urban Redevelopment Authority (URA).

MOF said it discovered "inconsistencies in the application of GST" on 18 government fees across the six agencies during an internal review of the GST treatment on government fees and charges conducted in November 2023.

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While GST would generally be charged for services rendered by government agencies, such as rental fees for hawker stalls and exhibition space, MOF acknowledged that the tax should not be charged on services which are regulatory in nature. The six agencies had initially deemed the 18 fees to be processing fees, but the internal review deemed otherwise.

MOF estimates the amount of wrongly-charged GST for individuals and non-GST registered entities who are not able to claim input tax to be about S$1.5 million per year. It added that the vast majority of the transactions involve GST of S$5 or less per transaction.

GST refund process

In its announcement, MOF and the six agencies issued an apology for the erroneous charging of GST, and have since instructed all agencies to take immediate steps to cease the charging of GST on the affected fees from Wednesday. The ministry also said that it would make the refund process as "seamless as possible".

The ministry said that the agencies would reach out to the affected taxpayers and refund, with interest, the GST that had been paid based on available records. As all GST-registered entities are required by law to keep records for up to five years, the agencies will have a record of the taxpayers who transacted within the last five years.

Beyond the five-year period, MOF said that agencies will "make proactive refunds where records are available". However, affected taxpayers who are not contacted by agencies by 30 June 2024 are advised to reach out to the relevant agencies to seek a refund.

MOF to amend GST Act

At present, government agencies assess and decide whether or not to impose GST on their fees based on broad principles and guidelines set out by MOF. Given that there are more than 5,000 government fees and charges, MOF said that this approach can result in mistakes by agencies, such as wrongly charging GST or even missing out on applying GST.

Going forward, MOF said it will amend the GST Act to clarify the treatment of GST for such fees and prescribe a list of regulatory fees where GST should not be charged to "minimise the risk of such errors in the future".

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