More than a hundred examination- and inspection-related fees will now be subjected to Goods & Services Tax (GST) after Parliament passed a bill on Apr. 2, 2024.

All affected fees will not increase immediately as the government will absorb the GST on these fees until end-2025, said Second Minister for Finance Chee Hong Tat.

The bill was introduced after the issue of wrongful GST charges on fees charged by the Government and statutory bodies, excluding town councils.

The Ministry of Finance (MOF) had previously announced on Feb. 14, 2024, that six Singapore government agencies had wrongly charged taxpayers an extra S$7.5 million in GST on 18 fees from 2019 to 2023.

"Such regulatory fees should not be subject to GST as they are imposed for the purposes of control and regulation," Chee said.

A list of non-taxable fees

Chee explained that the amendment bill seeks to simplify and clarify the rules around when GST should be charged.

He said the ministry intends to prescribe a list of non-taxable government fees.

These fees would include those for applications to confer approval for the conduct of a regulated activity and the 18 regulatory fees that will be refunded.

Chee gave an example, saying applications for professional licences and their licence renewal fees are non-taxable as they confer applicants the right to practise in the regulated profession.

All other fees that are not part of this list will be subjected to GST, he said.

The initial list will be published in the Government Gazette in end-April.

He added that MOF will work with agencies to progressively prescribe their regulatory fees in the non-taxable list and aim to complete it by September 2024.

Considering ways to reduce costs

Chee said the agencies involved have been asked to review their fees and consider ways to streamline processes or reduce costs.

"We will work closely with agencies on this to review if the above-mentioned fees may be reduced or even removed. If there are unavoidable cost increases, then agencies would have to raise their fees," he said.

However, the raising of fees will only happen after end-2025, and any increases will be phased in gradually, taking into consideration the impact on affected stakeholders, he added.

Top photo from Canva