Ministry of Finance orders six agencies to refund wrongly charged GST

The amount of wrongly charged GST for individuals and non-GST registered entities is estimated to be $1.5m yearly.

The Ministry of Finance (MOF) has directed six government agencies to refund the erroneously charged goods and services tax (GST) to affected taxpayers starting in March.

The MOF discovered “inconsistencies in the application of GST on certain government fees” and found that “18 fees across six agencies were wrongly charged with GST.”

The 18 fees apply to individuals and businesses, including GST-registered entities.

The amount of wrongly charged GST for individuals and non-GST registered entities is estimated to be $1.5m yearly.

Most of the transactions involve GST of $5 or less per transaction. 

“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 regulatory services,” the MOF explained.

“The 18 fees were initially deemed by agencies to be processing fees, but on review, were found to be regulatory. 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,” the MOF added.