SINGAPORE: People’s Action Party’s members of parliament Yip Hon Weng (Yio Chu Kang SMC), Dr Tan Wu Meng (Jurong GRC), and Shawn Huang (Jurong GRC) have filed parliamentary questions for the upcoming Parliamentary session on Feb 26, concerning the recent discovery by the Ministry of Finance (MOF) of wrongful Goods and Services (GST) charges across multiple agencies.
Earlier in the month, MOF revealed that they discovered inconsistencies in the application of GST on certain government fees during an internal review, and it concluded the review in January 2024 and found that 18 fees across six agencies were wrongly charged with GST.
Read related: Govt to refund S$7.5M wrongly charged GST since 2019
“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 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,” said MOF in a media release on Feb 14.
MP Yip’s questions directed to the Deputy Minister and the Minister for Finance, Lawrence Wong, seek not only to clarify why the government agencies wrongfully charged the GST but also whether the Ministry has any plans to leverage technology as well as any simplified rules and processes to prevent any similar situations from happening in the future.
As for Dr Tan, his questions are similar in nature to Mr Yip’s on finding the root causes for the wrongful charging of the GST on the 18 government fees and if the Ministry maintains an overview of such fees.
The Jurong GRC MP is also inquiring whether the Ministry had previously provided specific guidance to agencies on such interpretations and if there had been prior appeals or legal challenges to the interpretation of fees.
Fellow Jurong GRC MP Shawn seeks to understand how this issue was detected, what role internal controls or external reporting played in identifying the wrongful GST charges, and what steps are being implemented to prevent a recurrence of such an oversight in the charging of GST on government fees.
MOF have stated in their Feb 14 statement that the government will refund those who are wrongly charged the GST fees.
“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),” explained MOF.
The Ministry added that the current approach is for government agencies to assess and decide whether to impose GST on their fees based on broad principles and guidelines set out by MOF.
Moreover, MOF is taking steps to minimise the risk of such errors in the future due to the complexity of managing over 5,000 government fees and the potential for errors under the current system where agencies interpret GST guidelines.
This includes 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.
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