Finance

When the financial services provided 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 that are exempt supplies 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; and
• Provision of derivative that does not lead to any delivery of goods or services.

For the full list of exempt financial services, please refer to the list of financial services (170KB).

Arranging of Exempt Financial Services

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%).

Rules for Claiming GST Incurred

You must follow the rules below when claiming GST incurred on your business purchases:

1. You are allowed to claim input tax that is directly attributable to the making of taxable supplies, subject to conditions for claiming input tax.
2. You cannot claim input tax that is directly attributable to the making of exempt supplies.
3. 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 apportionment formula:
   
   
   Total Allowable Residual Input Tax = Residual Input Tax  x  Value of Taxable Supplies¹
                                                                                                    Value of Total Supplies¹

¹The value of imported services that are subject to reverse charge and supplies of digital services provided on behalf of underlying suppliers through your marketplace under the Overseas Vendor Registration Regime should be reported as your taxable supplies. However, the value of such supplies should be excluded from the numerator and denominator of the apportionment formula.

For more information, please refer to GST: Partial Exemption and Input Tax Recovery (995KB).

Download the Partial Exemption Input Tax Recovery Calculator (955KB) and use it to compute your input tax claimable.

Banking Industry

For ease of compliance, banks are approved to adopt a fixed input tax recovery ratio for the purposes of claiming input tax (excluding disallowed expenses) on an industry basis. This ratio is reviewed on a yearly basis.

Banks are also granted some administrative concessions to ease GST compliance. Banks that require more details can enquire with us or the Association of Banks of Singapore. If you are a tax agent representing a banking client and require more information on concessions specific to banks, please write in to us with your name, the tax firm and details of the bank that you are representing and your contact details.

Funds may incur GST when the fund procures services (e.g. fund management service) from GST-registered businesses. To simplify the rules for claiming GST incurred, funds that meet all the qualifying conditions are allowed to claim GST incurred on expenses, with the exception of disallowed expenses under the regulations 26 and 27 of the GST (General) Regulations, at an annual fixed recovery rate. The GST remission was granted from 22 Jan 2009 to 31 Mar 2014 and subsequently extended until 31 Mar 2019. In Budget 2019, the Government announced the extension of the GST remission till 31 Dec 2024.

Qualifying conditions

To qualify for the GST remission, the funds must:

1. be managed by a prescribed fund manager in Singapore; and
2. satisfy the conditions for specific income tax concessions as at the last day of their preceding financial year.

Example in determining the eligibility of GST remission in the financial year 2018:

To claim the GST incurred, qualifying funds will have to file a quarterly Statement of Claims to IRAS based on its financial year end. Each Statement of Claims is due one month after the end of the respective quarters. As an administrative concession, funds may file their quarterly Statement of Claims after the due date, subject to the following conditions:

1. The GST claims are made on tax invoices dated within the relevant quarter; and
2. The quarterly Statements of Claims are filed within 5 years from the end of the relevant quarter.

Example:
Period of claims: 1 Oct 2014 to 31 Dec 2014
Qualifying funds can file the Statement of Claims latest by 31 Dec 2019, and claim GST on tax invoices dated from 1 Oct 2014 to 31 Dec 2014.

From 1 Jan 2020, GST will be levied on Business-to-Business imported services by way of reverse charge. If the total value of your imported services for a 12-month period exceeds $1 million, funds (including qualifying funds) may become liable for GST-registration. Once registered, funds (including qualifying funds) will be required to report and account for GST on their imported services in the GST returns.

For more information on GST registration and the reporting requirements under the reverse charge regime, please refer to GST: Taxing imported services by way of reverse charge (1202KB).

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 or services.

You should report the net realised gains or losses arising from such transactions as the value of exempt supplies.

Find out more on value of exempt supplies to be reported in How Do I Prepare My GST Return (790KB).