The Monetary Authority of Singapore regulates the activities of the financial institutions. Examples of financial institutions include banks, insurance companies and stock brokers.
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 (PDF, 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%).
When you make exempt supplies and taxable supplies, GST incurred on your business purchases cannot be claimed in full unless you satisfy the
De Minimis Rule.
Rules for Claiming GST Incurred
You must 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 apportionment formula:
Total Allowable Residual Input Value of Taxable Supplies1
Residual Input = Tax x Value of Total Supplies1
Tax
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 (PDF, 501KB).
Download the Partial Exemption Input Tax Recovery Calculator (Excel, 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
(including Variable Capital Companies (“VCCs”)) may incur GST when the fund
procures services (e.g. fund management service) from GST-registered
businesses. A GST remission is granted until 31 Dec 2024 to allow funds that
meet qualifying conditions to claim the GST incurred.
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.
Extension of GST remission to Section 13H Funds
In Budget 2020, the Government announced that GST remission will be extended to approved venture capital funds under section 13H of the Income Tax Act (section 13H funds) from 1 Apr 2020 to 31 Dec 2025. Under the GST remission, section 13H funds that meet the qualifying conditions will be able to claim the GST incurred on their expenses at a fixed recovery rate to be determined for the industry.
Qualifying conditions
To qualify for the GST remission, the funds must:
- be managed by a prescribed fund manager in Singapore; and
- satisfy the conditions for specific income tax concessions as at the last day of their preceding financial year*.
*The
commencement date of the GST remission for the fund is the effective date of
the GST remission or the date that the fund is granted approval for the
specific income tax concession, whichever is later. The end date of the GST remission for the
fund is the last day that the fund qualifies for the specific income tax
concession.
An administrative concession is granted to allow newly
set-up funds to claim the GST incurred in the first year provided they meet the
specific income tax concession at the end of the first year.
Example in determining the eligibility of GST
remission in the financial year 2018:
| Fund’s financial year end | Eligible for income tax concession | Eligible for GST remission for 1 year from |
| 31 Mar | As at 31 Mar 2018 | YA2019 | Yes | 1 Apr 2018 to 31 Mar 2019 |
| 30 Jun | As at 30 Jun 2018 | YA2019 | Yes | 1 Jul 2018 to 30 Jun 2019 |
| 30 Sep | As at 30 Sep 2018 | YA2019 | Yes | 1 Oct 2018 to 30 Sep 2019 |
| 31 Dec | As at 31 Dec 2018 | YA2019 | Yes | 1 Jan 2019 to 31 Dec 2019 |
To claim the GST incurred, qualifying funds (including standalone VCCs
and sub-funds of umbrella VCCs) will each 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:
- The GST claims are made on tax invoices dated within the relevant quarter; and
- The quarterly Statements of Claims are filed within 5 years from the end of the relevant quarter.
Example:
Period of claims: 1 Oct 2020 to 31 Dec 2020
Qualifying funds can file the Statement of Claims latest by 31 Dec 2025, and
claim GST on tax invoices dated from 1 Oct 2020 to 31 Dec 2020.
For more information on documents to support GST claims by qualifying funds, please refer to
Explanatory Notes to GST Remission For Qualifying Funds (PDF, 172KB).
E-Filing of Statement of Claims
To improve the filing experience for funds, a new e-Service is now available for qualifying funds to e-File their Statement of Claims. With effect from 1 Jul 2020, it will be compulsory for funds to e-File their Statement of Claims using the e-Service. Submission of Statement of Claims via
myTax Mail will no longer be accepted.
Funds are strongly encouraged to start e-Filing their Statement of Claims early to enjoy the following benefits:
| (1) Easier filing process | - Fewer fields to complete
- Funds are not required to submit documents unless requested by IRAS
|
| (2) Faster processing time | - Receive your refund within 30 days unless your Statement of Claims is selected for audit.
|
(3) Instant acknowledgement | - Receive acknowledgement when Statement of claims are e-Filed successfully.
|
To e-File the Statement of
Claims, a person must be authorised by the qualifying fund as an approver for “GST
(Filing and Applications)” in CorpPass.
If
the Statement of Claims is to be e-Filed by a third party (e.g. tax agent
firm), the qualifying fund must authorise the third party in CorpPass as an
approver for “GST (Filing and Applications)”. This third party must in turn
authorise its individual staff to e-File the Statement of Claims for the
qualifying fund. Only persons authorised in CorpPass as an “approver” can
e-File the Statement of Claims to IRAS.
For
guidance on CorpPass set up and e-filing of statement of claims, please refer
to the following user guides:
For more information on CorpPass, please refer to IRAS' CorpPass webpage.
Qualifying Funds submitting the first Statement of Claims
Qualifying funds that are applying for GST remission for the first time need to perform an additional step. These funds will have to submit an online Application for GST Remission for Qualifying Funds (CorpPass authentication* required) and attach the following documents:
| Funds under S13R and 13X | - Approval letter from MAS; and
- All Annual Declarations submitted to MAS from the date
of approval from MAS
|
| Funds under S13H | - Letter of Offer from Enterprise Singapore;
- Fund's acceptance of offer;
- Annual report submitted to Enterprise Singapore; and
- Letter of undertaking by fund
|
Funds under S13CA | - Certificate of incorporation and the appointment of letter of local fund manager (for overseas fund); or
- Relevant documents to support the date of commencement of GST remission; and
- Letter of undertaking by fund
|
| Designated Unit Trust | - Relevant documents to support the date of commencement of GST remission; and
- Annual Declaration Form
|
| Other funds that are approved under the GST remission | - Relevant documents to support the date of commencement of GST remission; and
- Letter of undertaking by fund
|
Additional documents may be requested by IRAS. After the
application is approved, the qualifying fund will receive a notification from
IRAS. It can then set up its CorpPass authorisation and start e-Filing its
Statement of Claims at myTax Portal.
* Funds will have to submit
their application using the CorpPass account of the funds or their trustee,
fund manager or tax agent. For non-incorporated funds, they will also have to submit the trust deed with
the application.
You are encouraged to apply for GIRO for a faster and more convenient
way to receive your tax refund. Please mail the completed original copy of the
GIRO application form to 55 Newton Road Singapore
307987 after submitting your application online.
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.
GST-registered
funds may include the GST claims under remission that are not claimed in the Statement
of Claims previously, in the GST return. The recovery rate to be applied
on the GST claims will be the prevailing rate based on the date of the invoices.
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 (PDF, 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.
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 (PDF, 790KB).