In a recent internal review, the Ministry of Finance (MOF) has discovered that certain Government fees were wrongly subjected to Goods and Services Tax (GST). As a result, all six agencies involved will begin refunding the wrongly charged GST to affected taxpayers starting from March 2024.
According to Ministry of Finance (MOF) the review, which concluded in January 2024, found inconsistencies in the application of GST on 18 fees across six agencies.
From March onwards, several agencies including the Housing and Development Board (HDB), Land Transport Authority, Urban Redevelopment Authority, Singapore Food Agency, Office of the Public Guardian, and the Council for Estate Agencies will begin issuing refunds.
While GST should be charged on services rendered by Government agencies, such as fees for the use of public sports facilities or rental fees for hawker stalls and exhibition spaces, it should not be charged on services of a regulatory nature.
“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,” MOF added in its press release.
Both MOF and the six agencies involved have extended their apologies for the erroneous charging of GST. Immediate steps have been taken to cease the charging of GST on the affected fees.
The refund process will be made as seamless as possible for affected taxpayers.
Starting from March 2024, the agencies will reach out to the affected taxpayers and refund the wrongly charged GST, with interest, based on available records. All GST-registered entities are required by law to keep records for up to five years, enabling the agencies to identify the affected taxpayers who transacted within the last five years. For transactions beyond this period, proactive refunds will be made where records are available.
In the event that affected taxpayers are not contacted by the agencies by 30 June 2024, they are encouraged to reach out to the agencies to seek a refund.
To prevent future errors, the MOF will make legislative amendments to the GST Act to provide clarification on the treatment of GST for such fees. Additionally, a list of regulatory fees where GST should not be charged will be prescribed.
“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” said MOF in its statement.
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