SIX government agencies will refund the goods and services tax (GST) they mistakenly charged on 18 fees for regulatory services, ranging from administrative fees for renting out public flats to application fees for estate agent licences.

The amount of GST wrongly charged to individuals and non-GST registered businesses was about S$1.5 million a year, with the “vast majority” of such charges at S$5 or less, said the Ministry of Finance (MOF) on Wednesday (Feb 14).

For the 18 fees, there are about 200,000 transactions a year, of which about 90 per cent are with individuals. The total figure includes transactions with GST-registered entities, which are not affected and thus do not need refunds, because they would have claimed the GST paid as input tax, from the Inland Revenue Authority of Singapore.

All six agencies had stopped charging GST on the relevant fees as of Feb 14. From March, they will refund the GST charged to affected taxpayers, with interest of 5.5 per cent per annum, based on available records.

The agencies have records from Jan 1, 2019, as GST-registered entities are obliged to keep records for up to five years. But they may have been wrongly charging GST for years before this.

For affected transactions from before the five-year period, agencies will make “proactive refunds where records are available”, said MOF. If affected taxpayers are not contacted by Jun 30, they can reach out to the agencies directly to seek a refund.

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GST is generally charged on government services – such as the use of public sports facilities or hawker stall rental – but should not be charged on services deemed regulatory in nature.

Explaining the blunder, MOF said the agencies had initially considered these 18 fees to be processing fees, which attract GST. However, these fees were later found to be regulatory in nature, during an internal review of GST treatment of government fees and charges.

For instance, one agency wrongly charged GST on the application fee for a licence, while correctly not charging GST on the licence fee itself. The inconsistencies in GST treatment of government fees came to light in November; the review ended in January this year.

The six affected agencies are the Housing and Development Board (HDB), Land Transport Authority (LTA), Singapore Food Agency, Urban Redevelopment Authority (URA), Council for Estate Agencies, and the Office of the Public Guardian under the Ministry of Social and Family Development.

The smallest amounts of wrongly charged GST were S$0.70 on Class 2 bus service licence amendment fees, and about S$1 for administrative fees for renting out an HDB flat or bedroom. HDB fees accounted for more than 70 per cent of the 200,000 annual transactions.

The highest amounts included GST wrongly charged on processing fees for development applications to URA; these ranged from S$210 to S$560 for individual landed housing developments. GST charges for larger developments may have been for sums between S$10.50 and S$1,500; such applicants were mostly businesses.

The URA also wrongly charged GST on processing fees for lodgement of documents for development works.

Second Permanent Secretary for Finance Lai Wei Lin said: “MOF and the six agencies apologise for the erroneous charging of GST.”

There are more than 5,000 government fees and charges, with agencies themselves assessing whether to charge GST based on broad principles and guidelines set by MOF. To prevent such mistakes in future, MOF will table legislative amendments to the GST Act to prescribe a list of regulatory fees where GST should not be charged.

In separate statements, several agencies gave more details on the fees and refund process. LTA estimated that the total wrongly charged GST to be refunded is about S$12,000 per year.

URA said that since January 2019, about 37,700 applicants – businesses and landed property owners – had submitted development applications and lodgements. However, the number of actual refunds is expected to be “much lower”, because many of these applicants may be GST-registered businesses.

Refund processes differ by agency. Some refunds for the last five years will be made automatically, including all nine affected LTA fees.

Other agencies, including HDB and URA, will reach out to affected taxpayers to get further information for purposes of making refunds.