Singaporeans are set to receive refunds totaling S$7.5 million (US$5.6 million) following the government's acknowledgment of erroneously charging Goods and Services Tax (GST) over the past five years.
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The Ministry of Finance (MOF) and six involved agencies issued a joint apology for the oversight, promising to rectify the error and make the refund process as seamless as possible.
The issue came to light during an internal review initiated by the MOF last November. It was concluded in January that inconsistencies in the application of GST were found in fees collected by six government agencies, including the Housing and Development Board (HDB), Land Transport Authority, and Urban Redevelopment Authority.
According to Ms. Lai Wei Lin, Second Permanent Secretary for Finance, the erroneous charging of GST affected 18 government fees, which were initially deemed as processing fees but were later found to be regulatory in nature upon review. As a result, individuals and businesses were wrongfully charged GST for services that should have been exempt.
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The affected fees cover a wide range of transactions, including those related to public sports facilities usage, hawker stall rentals, and professional license application fees. HDB fees constituted the majority of transactions, accounting for over 70% of the total.
While GST-registered entities can claim the erroneously charged GST as input tax, individuals and non-GST-registered entities are eligible for refunds. The MOF estimates that the yearly amount of wrongly charged GST for this group totals approximately S$1.5 million, with the majority of transactions involving small amounts of GST, typically S$5 or less per transaction.
To ensure affected taxpayers receive their refunds, the six agencies will begin contacting individuals and entities from March based on available records dating back to January 1, 2019. As per regulations, all GST-registered entities are required to maintain records for up to five years, facilitating the refund process for transactions within this timeframe.
For transactions beyond the five-year period, the agencies have pledged to proactively issue refunds where records are available. Taxpayers who believe they are eligible for a refund but are not contacted by June 30 are encouraged to reach out to the respective agencies for assistance.
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In addition to refunding the erroneously charged GST with interest, the government has reiterated its commitment to ensuring a smooth refund process for affected taxpayers. The proactive approach taken by the MOF and the six agencies reflects Singapore's dedication to upholding transparency and accountability in financial matters, providing assurance to citizens and businesses alike.