The Monetary Authority of Singapore regulates the activities of the financial institutions. Examples of financial institutions include banks, insurance companies and stock brokers.
On this page:
Charging GST
Claiming GST incurred
Claiming GST on prescribed expenses for qualifying funds
Reporting your exempt supplies
Charging GST
If the financial services you provide fall within the 4th Schedule of the GST Act, the services are exempt supplies. No GST needs to be charged for exempt supplies.
Examples of these financial services include:
- Provision of loans;
- Issue / sales of shares or bonds;
- Provision of life policy by an insurance company;
- Charges by banks for the operation of bank accounts;
- Exchange of currency;
- Provision of futures or forward contract.
For the full list of exempted financial services, please refer to the list of financial services (79KB).
However, services such as the arranging or broking of insurance, underwriting or advising of financial activities do not fall within the scope of exemption. You need to charge GST for such services. Where the services qualify as international services, you may zero-rate such supply of services (i.e. charge GST at 0%).
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Claiming GST incurred
If you make exempt supplies and taxable supplies, GST incurred on your business purchases cannot be claimed in full unless you satisfy De Minimis Rule. You are required to follow the rules below when claiming GST incurred on your business purchases.
- You are allowed to claim input tax that is directly attributable to the making of taxable supplies, subject to conditions for claiming input tax.
- You cannot claim input tax that is directly attributable to the making of exempt supplies.
- For input tax that cannot be identified as directly attributable to either taxable or exempt supplies (i.e. residual input tax), the amount that can be claimed is computed using the following formula:
For more information, please refer to Partially Exempt Traders and Input Tax Recovery (172KB).
Fixed input tax recovery ratio
For ease of compliance, some financial institutions may have been approved to adopt a fixed input tax recovery ratio for the purposes of claiming input tax (excluding disallowed expenses) on industry basis. This ratio is reviewed on a yearly basis.
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Claiming GST on prescribed expenses for qualifying funds
Funds may incur GST when it procures services (e.g. fund management service) from GST-registered businesses.
To simplify the rules for claiming GST incurred, the Minister for Finance has announced in Budget 2009 that all qualifying funds that are managed by a prescribed fund manager in Singapore are allowed to claim GST incurred on prescribed expenses at an annual fixed recovery rate. The remission will take effect from 22 Jan 2009 to 31 Mar 2014 (both dates inclusive).
Details of the GST remission (such as the types of qualifying funds, qualifying conditions, prescribed list of expenses and procedures to claim GST) has been released by the Monetary Authority of Singapore (MAS) to fund managers, banks and trust companies in Apr 2009.
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Reporting your exempt supplies
Exempt supplies have to be reported in Box 3 (Total value of exempt supplies) of your GST return.
You may engage in foreign currency transactions and derivative transactions such as swaps, futures and forwards which do not lead to the physical delivery of goods. You should report the net realized gains or losses arising from such transactions as the value of exempt supplies.
Exempt supplies arising from the issuance or sale of shares, bonds, options, warrants, interest rate collars, floors and caps are reported based on gross proceeds received.
Find out more on value of exempt supplies to be reported in How Do I Prepare My GST Return (520KB).
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