SINGAPORE — With more than 200,000 annual transactions for regulatory fees that were wrongly charged with the Goods and Services Tax (GST) since 2019, several questions remain over how the Government will return the S$7.5 million in erroneous charges chalked up over the past five years.

The errors came to light following a Ministry of Finance (MOF) internal review, which the ministry revealed on Wednesday (Feb 14). The probe found that 18 fees imposed by six government agencies had charged GST when they were not supposed to.

The agencies involved with the erroneous charges are the Council for Estate Agencies (CEA), the Housing and Development Board (HDB), the Land Transport Authority (LTA), the Office of the Public Guardian (OPG) under the Ministry of Social and Family Development, the Singapore Food Agency (SFA) and the Urban Redevelopment Authority (URA).

These fees include those involving HDB flat rentals or vehicle modification applications, among others.

MOF said all six agencies will cease charging GST for the 18 fees from Wednesday and are facilitating the refund process.

However, those affected should note that the refund process may differ slightly for the various agencies, according to press releases issued on each agency's websites. 

Here are some frequently asked questions about how the errors occurred and how those affected can seek reimbursement.

Q: How do I get my money back?

If the transaction happened between Jan 1, 2019 and Feb 13, 2024, the agencies will reach out with instructions on how to receive the refund. 

CEA said those who paid the application fee for an estate agent licence and real estate salesperson registration and are eligible for refunds will receive the money via interbank transfer starting in mid-March.

HDB said it will reach out to affected households whose records are available in their system from mid-March. 

LTA will credit refunds to eligible recipients with bank accounts registered with LTA or valid PayNow accounts. Those who did not register or update their bank account information with LTA will be notified to do so.

OPG will reach out to affected individuals and companies via letters from March. The amount to be refunded, including interest, will be specified in the letter. These refunds will be made via PayNow or bank transfer, and affected parties who do not hear from OPG by June 30 can contact its office. 

SFA said it will contact businesses eligible for the refunds via their registered email and business address, adding that only non-GST registered businesses at the point of payment are eligible.

URA will contact eligible applicants via email from March 1 to June 30. 

Q: What should I do if my transaction happened more than five years ago?

If you made a transaction for the 18 fees more than five years ago, MOF said agencies will make the refunds for these older transactions if the records are available. 

Those who are not contacted by agencies by June 30 may reach out to the agencies to seek a refund.

Check that your transaction matches any of the 18 fees that wrongly charged GST first before reaching out, several agencies said.

CEA said affected parties can also check on the eligibility status for such transactions via its e-Services portal under the GST Refund module, which will be made available from end-March. 

HDB said if the records are available, it will also give refunds for older transactions automatically if they happened more than five years ago. However, households who have not heard from HDB by June 30, but want to seek a refund, can submit a request online by Dec 31. 

LTA noted that those who made payment for the fees before 2019 can submit their claims via LTA's online feedback form from July 1 to Dec 31. Basic documents, such as LTA receipts and any record of applications, are required. 

Meanwhile, SFA said businesses that made payments before Jan 1, 2019, can write to it by Dec 31 to inquire if they are eligible for a refund. 

URA said eligible applicants who were wrongly charged GST before Jan 1, 2019, will be invited to reach out to it and apply for a refund via the URA website. 

Q: Why only up to five years?

In response to TODAY's queries, an MOF spokesperson said the 18 fees have been incorrectly subject to GST since their inception.

Nevertheless, all GST-registered entities, including ministries and statutory boards, are required by law to keep records for up to five years.

This means that there are likely more affected parties that had transacted before Jan 1, 2019, but the agencies may not have a record of them.

Q: Why was this error only detected now? 

The discrepancies were detected during a review of the GST treatment on government fees and charges. MOF concluded the review in January and found that GST was wrongly charged for 18 fees across six agencies.

MOF told TODAY that there had been inconsistencies in the application of GST on certain fees and charges, which was why it conducted an internal review of all regulatory fees charged across the Government.

The spokesperson added that the ministry conducts reviews of various aspects of the GST regime every year.

"Such reviews can arise from industry feedback, international developments, et cetera," said the spokesperson.

In response to TODAY's queries on whether such checks for errors are done as part of its annual audits, the Auditor-General’s Office (AGO), which scrutinises the finances of government bodies, said it adopts a risk-based approach in determining the areas to be covered in an audit.

"In selecting the revenue transactions for audit, one of the key factors AGO considers is materiality," said the office's strategic planning and policy department director Cherrie Ng.

Materiality is an auditing concept that refers to the significance of an item or transaction in the financial statements. It helps determine whether certain information or errors are significant enough to impact decisions made by users of those financial statements.

Of the six agencies with erroneous charging of GST, Ms Ng said only the accounts of OPG are part of the government financial statements, and that the remaining five agencies had their annual financial statements audited by commercial auditors.

"AGO carries out selective audits of these statutory boards on a cyclical basis... In cases where revenue and collections are selected for audit, our focus is on whether the fees charged and collected were in accordance with the respective statutory board’s regulations.

"AGO would check whether the fees collected were in accordance with what was gazetted," said Ms Ng. 

Q: How did these erroneous charges come about?

In general, the Government charges GST for services it provides, like using public sports facilities or renting hawker stalls. But it should not charge GST for services that are regulatory in nature.

MOF stated that the agencies had initially thought that the 18 fees were processing fees.

However, upon further review, it was found that the fees were a form of regulatory fees. 

As an example, an agency should not charge GST to a business that applies for a regulatory licence. This includes not charging GST for the application fee as well as any licence fees, as the service provided by the agency is regulatory in nature.

On the other hand, an agency can charge GST for its services, such as rental fees for hawker stalls and exhibition spaces, as well as fees for using public sports facilities.

Q: How will the Government ensure this will not happen again?

At present, government agencies determine whether to apply GST to their fees using general principles set by MOF, instead of through legislation.

But given the large number of fees charged by the Government, this approach can lead to errors in either wrongly charging GST or not applying GST where necessary, said MOF. 

To prevent future mistakes, MOF plans to amend the GST Act to clearly define GST treatment for over 5,000 government fees and charges. It will also set up a list of regulatory fees that are exempted from GST.