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
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%).
Claiming GST Incurred
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
1The value of relevant supplies received from your supplier that are subject to customer accounting, imported services and low-value goods that are subject to reverse charge and supplies of remote services and low-value goods made 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, 459KB).
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 (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 incurred for the purpose of the fund's qualifying investment activities, 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.
* Note: Section 13H had been renumbered to Section 13G with effect from 31 Dec 2021.
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.
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.
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, 157KB).
Funds (e.g., newly set-up funds) can claim the GST incurred in their first year of the grant of income tax concession if they meet the conditions of the specific income tax concession at the end of the first year.
Example: Fund meets the conditions of income tax concession at the end of first year
|Fund’s financial year end||31 Dec|
|Date of fund granted approval for the specific income tax concession||1 Jul 2022|
|Eligibility for income tax concession|
As at 31 Dec 2022(First year)
|YA2023||Eligible as all conditions for income tax concession met|
|Eligible for GST remission|
1 Jan 2023 to 31 Dec 2023 as the fund meets the conditions for the income tax concession at the last day of their preceding financial year (31 Dec 2022).As a concession, the GST incurred from 1 Jul 2022 to 31 Dec 2022 can be claimed, but only after the fund established that it meets the conditions for the income tax concession as at 31 Dec 2022.
[NEW!] Enhanced administrative concession
If a fund cannot meet the conditions of the specific income tax concession at the end of the first year of the grant of income tax concession as it is unable to meet the minimum spending requirement, but the fund is able to meet the conditions at the end of the second year, the fund can claim the GST incurred in the second year. However, the GST can only be claimed after the fund has established that it meets the conditions of the income tax concession at the end of the second year. The GST incurred in the first year remains not claimable.
Example: Fund meets the conditions of income tax concession at the end of second year
|Fund’s financial year end||31 Dec|
|Date of fund granted approval for the specific income tax concession||1 Nov 2022|
|Eligibility for income tax concession|
As at 31 Dec 2022(First year)
|YA2023||Not eligible as minimum spending requirement not met|
As at 31 Dec 2023(Second year)
|YA2024||Eligible as all conditions for income tax concession met|
|Eligible for GST remission|
1 Jan 2024 to 31 Dec 2024 as the fund meets the conditions for the income tax concession at the last day of their preceding financial year (31 Dec 2023).
As a concession, the GST incurred from 1 Jan 2023 to 31 Dec 2023 can be claimed, but only after the fund established that it meets the conditions for the income tax concession as at 31 Dec 2023.The GST incurred from 1 Nov 2022 to 31 Dec 2022 remains not claimable.
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|
|(2) Faster processing time|
(3) Instant acknowledgement
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:
- Setting up Corppass and assignment of e-Services (PDF, 2,900 KB) (applicable for qualifying funds)
- Assigning of e-Services to users of third parties (PDF, 1,794 KB) (applicable for third parties, e.g. tax agents)
- E-filing of Statement of Claims at myTax Portal (PDF, 627KB) (applicable for both qualifying funds and third parties)
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 (Singpass authentication* required) and attach the following documents:
|Funds under S13O (formerly S13R) and S13U (formerly S13X)^|
|Funds under S13G (formerly S13H)^|
Funds under S13D (formerly S13CA)^
|Designated Unit Trust|
|Other funds that are approved under the GST remission|
^Note: The renumbering changes took effect from 31 Dec 2021.
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 Singpass 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.
GST Registration by Way of Reverse Charge
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.
From 1 Jan 2023, the application of reverse charge would be extended to the purchase of imported low-value goods (“LVG”). The requirement to perform reverse charge applies to all low-value goods and includes low-value goods purchased from local and overseas suppliers, electronic marketplaces and redeliverers, regardless of whether they are GST-registered or not. From 1 Jan 2023, if the total value of your imported services and low-value goods for a 12-month period exceeds S$1 million, and you would not be entitled to full input tax credit even if you were GST-registered, you may become liable for GST-registration under the new GST registration rules. Once registered for GST, you will be required to account for GST on your taxable supplies, your imported services and low-value goods which are subject to reverse charge.
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: Reverse Charge (PDF, 947KB).
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.
Find out more on value of exempt supplies to be reported in How Do I Prepare My GST Return (PDF, 790KB).
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).