On April 2, 2024, Singapore’s Second Minister for Finance, Chee Hong Tat, announced that the government will publish a list of regulatory fees exempt from the Goods and Services Tax (GST) by the end of April. Following this new framework, any fees not included in the list will automatically be subject to GST, including those currently untaxed.

To mitigate the impact of this change on citizens, the government plans to absorb the GST charges until the end of 2025. This means that any fees affected by the legislative amendments will not see immediate increases due to the changes.

The recent amendments follow revelations from an internal review that 18 regulatory services had wrongly charged GST, amounting to at least S$7.5 million over five years. Chee explained that these fees, imposed for regulatory purposes, should not incur GST, while service fees, such as those for public facility rentals, will still be taxed.

Historically, government agencies have been responsible for self-assessing their fees to determine their GST applicability. However, inconsistencies have arisen, leading to wrongful charges, prompting the Ministry of Finance (MOF) to take a more active role in fee assessments.

As part of the new approach, the MOF and the Inland Revenue Authority of Singapore will collaborate with agencies to review approximately 1,700 regulatory and ancillary fees that currently do not attract GST. The aim is to classify and include these fees in a non-taxable list by September.

Three key categories of fees will be affected by this legislative change. The first category includes fees for services that are already subject to GST and will remain unchanged. The second includes fees inconsistently charged with GST; the government will validate past collections for consistency with clarified policies.

The third category encompasses fees that are not currently taxed but should be, such as examination and inspection-related fees. For these fees, the government will absorb GST initially, with a freeze on potential increases until the end of 2025.

Agencies are encouraged to streamline their processes and consider reducing or eliminating unnecessary fees. If unavoidable cost increases occur, any subsequent fee adjustments will be phased in only after 2025 to minimize the financial burden on citizens.