Regulated Financial Institutions

The Monetary Authority of Singapore regulates the activities of the financial institutions. Examples of financial institutions include banks, insurance companies and stock brokers.

Exempt Financial Services

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%).

Claiming GST Incurred

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:

  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 formula:
    To arrive at the total allowable residual input tax, you should multiply the residual input tax before apportionment by the proportion of the value of taxable supplies to the value of total supplies.

For more information, please refer to GST: Partial Exemption and Input Tax Recovery (258KB).

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.

Claiming GST on Expenses for Qualifying Funds

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:

Fund’s financial year endEligible for income tax concession     Eligible for GST remission for 1 year from
 31 Mar As at 31 Mar 2018YA2019  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 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.

Updated!

Qualifying funds are required to file a simplified Statement of Claims (75KB) online via myTax Mail with effect from 1 Jul 2018.

Simplified Statement of Claims

Qualifying funds only need to complete a 3-line statement of the GST claims instead of providing a detailed breakdown of them. The breakdown of the GST claims and other supporting documents need not be submitted unless requested by IRAS.

Filing of Statement of Claims via myTax Mail

Qualifying funds may access myTax Mail by logging in to myTax Portal. With effect from 1 Sep 2018, qualifying funds will have to use CorpPass to log in to myTaxPortal to file their Statement of Claims.

For more information on how to set up CorpPass, please refer to IRAS' CorpPass webpage for the step-by-step instructions. You may refer to the user guide (490KB) on how to file the simplified Statement of Claims via myTax Mail.

Filing of first Statement of Claims

With effect from 1 Jul 2018, qualifying funds filing their Statement of Claims for the first time are required to provide the following documents together with their simplified Statement of Claims via myTax Mail*:

  • Approval letter from MAS (except those funds under 13C, 13G, 13CA and DUT)
  • MAS annual declaration / self-assessed declaration form (if any)
  • Appendix 1 of the simplified Statement of Claims

*New non-incorporated funds will have to file their Statement of Claims and the required documents using myTax Portal account of their preparers (i.e. trustee, fund manager or tax agent).

Reporting 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 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 (702KB).

  • I am accorded with the section 13R status by the Monetary Authority of Singapore on 1 Apr 2015 and I met the conditions for income tax concession at the end of my first financial year. Can I claim GST incurred in full as long as the tax invoices are dated on or after 1 Apr 2015, regardless when the services are performed?

    You can claim the GST incurred on the expenses in full provided that:

    1. The tax invoices are dated on or after 1 Apr 2015;
    2. You make payment only after the tax invoices are issued by the supplier; and
    3. The underlying services are not performed before 22 Jan 2009.

     

  • I am a qualifying fund and have been claiming GST incurred on purchases using the fixed recovery rate. I received a credit note from my supplier to adjust the value for a tax invoice issued last year. Should I use the current or last year’s recovery rate to repay the GST?

    If you receive credit notes from suppliers, you have to repay the amount based on the fixed recovery rate at which you had previously claimed the GST (i.e. date of original tax invoice).

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