SINGAPORE: Six government agencies had erroneously levied Goods and Services Tax (GST) on 18 fees for regulatory services, ranging from application fees for professional licences to administrative fees for renting out public flats, the Ministry of Finance (MOF) said on Wednesday (Feb 14).
The amount of GST wrongly charged is about S$1.5 million (US$1.1 million) a year, with the “vast majority” being charges of S$5 or less.
MOF said the government will start making refunds, with interest of 5.5 per cent a year, “based on available records” over the past five years.
This means that at least S$7.5 million will be refunded to affected individuals and non-GST registered businesses. GST-registered businesses are not eligible for refunds as they would have previously claimed the GST charges as input tax.
The agencies in question are 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 (CEA).
HDB alone accounted for over 70 per cent of the 200,000 erroneous charges each year.
GST is generally levied on government services such as the use of public sports facilities or the rental fees for hawker stalls. But it should not be charged for services that are regulatory in nature, MOF said.
At the moment, government agencies, like businesses, get to “assess and decide whether or not to impose GST on their fees based on broad principles and guidelines set out by MOF”. In this case, the six agencies had wrongly determined their fees as taxable provisions of services.
This error was uncovered last November during an internal review conducted by MOF.
All six agencies have stopped charging GST on the relevant fees as of Feb 14.
In a press release, the MOF and the six agencies involved apologised for the “erroneous charging” of GST and pledged to make the refund process “as seamless as possible”.
In separate releases, the agencies also provided more details of the regulatory service fees that were wrongly levied with GST and their respective refund processes. Here’s the breakdown:
1. Housing and Development Board
The HDB had wrongly charged GST on two administrative fees – renting out of public flats and the compulsory acquisition of flats due to infringements under the Housing and Development Act.
Flat owners who rent out their flat or spare bedrooms must apply to HDB and pay an administrative fee. Such fees were previously at S$20 and S$10 inclusive of GST. With the announcement on Wednesday, these have been revised to S$18 and S$9, respectively.
Those who have their homes compulsorily acquired by HDB due to law infringements, such as the unauthorised renting out of their flat, also have to pay administrative fees which vary depending on the complexity of each case. In this case, the average GST charged was about S$15.
HDB said it will, starting from mid-March, reach out to around 50,000 households who had paid GST on these fees across 160,000 transactions annually in the last five years, and whose records are available in its system.
These affected households will receive a notification via their Singpass app and a hardcopy letter by Jun 30. They will be asked to provide “some simple details” through a dedicated e-service on HDB’s website, and will receive an email once the refund is made to their bank accounts.
Beyond the five-year period, HDB said it will make “proactive refunds where records are available”.
Those who are not contacted by HDB by end-June can submit a refund request via HDB’s website by Dec 31, 2024. Those who require further assistance can also call its hotline at 1800-866-6812 between 8am and 5pm from Monday to Friday.
“As we expect a high volume of queries during this period, we seek the public’s patience and understanding if a longer time is needed to respond to their queries,” HDB said.