SINGAPORE: Six government agencies are set to refund at least S$7.5 million due to Goods and Services Taxes (GST) that were mistakenly charged over the last five years.
On Feb 14 (Wednesday), the Ministry of Finance (MOF) and six other agencies involved in the “erroneous charging” of the GST over 18 fees apologized in a press statement.
Refunds will be given out starting from March this year from the Housing and Development Board (HDB), Land Transport Authority (LTA), Urban Redevelopment Authority (URA), Singapore Food Agency (SFA), Office of the Public Guardian and the Council for Estate Agencies.
MOF said it “discovered inconsistencies in the application” of GST on specific government fees when an internal review of the GST treatment on government fees and charges was carried out.
By the time MOF ended the review last month, it found that 18 fees across six agencies had been wrongly charged with GST.
“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,” MOF said.
The 18 fees, which apply to individuals and businesses, had initially been considered processing fees but turned out to be regulatory fees.
MOF gave the example of an agency charging GST on the application fee for a licence, though it did not charge GST on the licence itself.
The ministry wrote that neither the application nor the licence fee should be charged with GST, adding that all the agencies have stopped charging GST on the affected fees beginning today.
Refunds will be given out to the affected individuals and non-GST registered entities.
About S$1.5 million in GST fees has been wrongly charged annually since 2019, with most transactions involving a GST of S$5 or less each.
The full list of wrongly charged GST fees may be found here. They include administrative fees for renting out an HDB flat or bedroom (HDB), Conversion Fee from a Private Hire Car Driver’s Vocational Licence to a Taxi Driver Vocational Licence (LTA), and the application fee for a licence to operate a food processing establishment (SFA).
MOF said that the refund process will be “as seamless as possible”, with the agencies reaching out to affected taxpayers starting next month.
Moreover, the refunds will be paid with interest for the GST that had been paid based on available records for the past five years.
Affected taxpayers who have not been contacted may reach out to agencies by June 30, 2024, to seek a refund. Contact information for the various agencies may be found here.
MOF added: “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.”
In the future, to minimize the risk of repeated errors of this nature, MOF will carry out legislative amendments to the GST Act to clarify its treatment of GST for these fees and prescribe a list of regulatory fees where GST should not be charged.
“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,” the ministry added. /TISG
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