MOF to list GST-exempt government fees by April

There are three categories of fees subject to GST.

The Ministry of Finance (MOF) will prescribe a list of government fees not subject to goods and services tax (GST). 

Second Minister for Finance, Chee Hong Tat, said the MOF plans to publish the list by the end of April.

“Fees in the non-taxable list would include those for applications to confer approval for the conduct of a regulated activity,” Chee told the Parliament during the second reading of the Goods and Services Tax (Amendment) Bill.

“For example, applications for professional licences and their licence renewal fees will be non-taxable, as they confer applicants the right to practise in the regulated profession,” Chee said.

In February, 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.”

“We are now working with agencies on the remaining regulatory and ancillary fees, which do not charge GST. There are more than 1,700 such Government fees which MOF is in the midst of reviewing,” Chee said.

All other government fees not part of the prescribed list will be subject to GST.

Chee said fees not prescribed in the non-taxable list are categorised into three.

“The first category, which is the vast majority of fees, comprises fees for services provided by the Government which are clearly subject to GST and are already charged with GST today. There is no change in the treatment of these fees. Examples are fees for the rental of public sports facilities, which I mentioned earlier,” Chee said.

“The second category comprises fees that are charged with GST today, but where there has been inconsistency in the interpretation of the law by agencies,” Chee said, citing examination fees as an example.

For these two categories, Chee said there will be “no change to the status quo.”

The third category would be fees not charged with GST today “but should be charged with GST moving forward.” 

“These include examination fees, which some agencies are currently not charging GST. Other examples include inspection fees prior to the licensing and conduct of certain business operations. We estimate that there are more than a hundred such examination and inspection-related fees,” Chee said.

“For this third category of fees where GST has to be charged, the Government will help to minimise the impact on the public. We will absorb the GST on these fees in the first instance, and impose a freeze on these fees until end-2025. Hence, all affected fees will not increase immediately as a result of the amendments,” Chee added.