Government to refund S$7.5 million in wrongly charged GST over last five years
The Ministry of Finance and the six agencies involved have apologised for the “erroneous charging” of the Goods and Services Tax on 18 government fees.
A view of the Singapore skyline on Jan 27, 2023. (File photo: Reuters/Caroline Chia)
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SINGAPORE: The government will make at least S$7.5 million (US$5.6 million) in refunds to individuals and businesses that were wrongly charged with the Goods and Services Tax (GST) for fees paid to six government agencies.
The agencies – 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 start making refunds from March.
The Ministry of Finance (MOF) said on Wednesday (Feb 14) that “inconsistencies in the application of GST on certain government fees” were uncovered last November during an internal review. The review was concluded in January and 18 fees across six agencies were found to be wrongly charged with GST.
In a press release, the ministry and agencies involved apologised.
"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 Second Permanent Secretary for Finance Ms Lai Wei Lin.
"The government will refund affected taxpayers the GST charged for the fees, and we will make the refund process as seamless as possible."
GST is generally levied on services provided by government agencies, such as fees for the use of public sports facilities or rental fees for hawker stalls and exhibition spaces.
But it should not be charged for services that are regulatory, such as application fees for a professional licence, said the ministry.
“The 18 fees were initially deemed by agencies to be processing fees, but on review, were found to be regulatory in nature,” it said.
The 18 government fees and the GST wrongly charged per transaction
Council for Estate Agencies
1. Application fee for Estate Agent licence: S$7
2. Application fee for Real Estate Salesperson registration: S$3.50
Housing and Development Board
3. Administrative fees for renting out of HDB flat or bedroom: ~S$1
4. Administrative fees for compulsory acquisition of flat: S$15
Land Transport Authority
5. Class 2 Bus Service Licence amendment fee: S$0.70
6. Conversion fee from private-hire vocational licence to taxi driver vocational licence: S$2.10
7. Export Processing Zone entry fee: S$2.50
8. Application fee for autonomous vehicle authorisation: S$2.40
9. Application fee to keep deregistered/unregistered vehicles: S$42.70
10. Application fee to change garage address of Keeping Scheme vehicles: S$12.20
11. Application fee for Special Purpose Licence: S$20.10
12. Application fee for change of vehicle particulars requiring LTA's approval: S$4.40
13. Application and extension fees for vehicle accessory approval: S$15
Office of the Public Guardian
14. Application fee for registration for professional deputies: S$36
15. Lasting Power of Attorney application fee: S$9.70
Singapore Food Agency
16. Application fee for licence to operate a food processing establishment: S$13
Urban Redevelopment Authority
17. Processing fee to obtain planning permission for development works: Variable, majority ranges from S$10 to S$1,500
18. Processing fee for lodgment of documents for development works: Variable, from S$10 to S$84
WHO IS AFFECTED AND HOW REFUNDS WILL BE MADE
The 18 fees collected by the six agencies apply to both individuals and businesses.
Collectively, these cover around 200,000 transactions annually, 90 per cent of which are by individuals and the rest involve businesses.
HDB fees accounted for more than 70 per cent of the transactions.
The total figure of transactions includes transactions with GST-registered entities, which are not affected as they would have been able to claim the charges as input tax previously.
Only individuals and non-GST registered entities that cannot claim input tax are eligible for the refunds.
MOF said the amount of wrongly charged GST for this group is estimated at S$1.5 million per year, with the vast majority of transactions involving GST of S$5 or less for each transaction.
The government said it will refund the erroneously charged GST with interest, and pledged to make the refund process “as seamless as possible”.
The six agencies will contact affected taxpayers from March based on “available records” since Jan 1, 2019.
“All GST-registered entities are required by law to keep records for up to five years. The agencies will therefore have a record of the taxpayers who transacted within the last five years,” MOF said.
This means that the amount of wrongly charged GST is estimated at S$7.5 million over the past five years.
Beyond the five-year period, agencies “will make proactive refunds where records are available”. MOF said affected taxpayers who are not contacted by Jun 30 can contact the agencies to seek a refund.
LEGISLATIVE AMENDMENTS
Currently, there are more than 5,000 government fees and charges and the 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.
"This approach can result in mistakes by agencies – be it to wrongly charge GST, or even to miss out on applying GST," the ministry said.
The 18 fees in question represent less than 0.5 per cent of the total number of government fees.
To minimise the risk of such errors in the future, MOF said it intends to make legislative amendments to the GST Act to “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,” MOF said.
“Where errors are discovered, we take immediate action to rectify them.”
