GST Changes

 

Key takeaways

The following key Goods and Services Tax (“GST”) changes impacting banks and financial services will come into effect from 1 January 2023:

  1. GST rate will increase from 7% to 8% from 1 January 2023 and 8% to 9% from 1 January 2024

  2. GST will be computed on the recovery of overseas brokerage (and other trade related charges) for shares traded on overseas exchanges
 

What is GST?

GST is a consumption tax that is levied on the supply of goods and services in Singapore and the import of goods into Singapore (collected by Singapore Customs). In other countries, GST is known as the Value-Added Tax or VAT.

 

About Singapore’s GST rate change

In the Singapore Budget 2022, the Minister for Finance announced that the GST rate will be increased from:

(i) 7% to 8% with effect from 1 January 2023; and

(ii) 8% to 9% with effect from 1 January 2024.

For more information, please refer to IRAS’ website here.

 

How will the GST rate change affect you as a customer?

GST exemptions apply to the provision of certain financial services. As a general rule, purchases of goods and services from GST-registered businesses before 1 January 2023 will be subject to GST at 7%, and purchases on or after 1 January 2023 will be subject to GST at 8%.  There are scenarios where special GST rules will apply for events that straddle 1 January 2023. 

Please refer to IRAS' website here for such scenarios.


Impact on banking services and products:

As prevailing practice, fees and services relating to products that are not subject to GST are not impacted by the rate change.

Examples of fees and services not subject to GST include:

  • Fees incurred for the operations of current, deposit or savings account
  • Remittance and money transfers – issuance of bank drafts, cheques, money order, direct debits, GIRO/ Standing instructions, transfers between accounts
  • Interest on loans and advances including overdrafts, mortgage loans, trust receipts, foreign currency loans
  • Interest earned on deposits


Examples of fees and services subject to GST include:

  • Arranging, broking, underwriting, custody and advisory services
  • Credit cards – annual fees, chargeback fees, air miles conversion admin fee and statement retrieval fees
  • CPF Investment Account – transaction fees, service charges
  • Fees charged to cash card holder for each cash card statement printout
  • Safe Deposit Box rental
  • Unit Trust commission/ management fees
  • Trustee – custodian/ management fee
  • Commission, brokerage and other service fees relating to the Derivatives Clearing and Execution Account

(Kindly note that the above list is not exhaustive.)

 

Removal of GST administrative concession on recovery of overseas/ foreign brokerage and related charges


With effect from 1 January 2023, the prevailing GST rate will be chargeable on the recovery of all overseas/ foreign brokerage and trade-related charges from clients of Singapore brokers and banks following the removal of a concession. Prior to this, such overseas/ foreign brokerage and trade-related charges borne by clients of Singapore brokers and banks are GST exempt.

For more information, please refer here.
 

FAQs

General

As announced by the Finance Minister in the 2022 Budget, the GST rate will increase from 7% to 9% over the following periods:

  • 1 July 2007 to 31 December 2022: 7%
  • 1 January 2023 to 31 December 2023: 8%
  • 1 January 2024 onwards: 9%

For existing fees and services that are currently charged with GST, the GST rate will increase according to the announced implementation dates.

There are no changes to existing fees and services that are not subject to GST.

Current and Savings Account

Charges for the operation of Current Accounts and Savings Accounts are GST exempted. No GST is charged on these services. There will also be no GST levied on interest earned on deposits.

Loans

Payment of principal loan amount and interest (monthly instalment) are not subject to GST.

Application fee and audit confirmation of customer's loan accounts are subject to GST.

Stamp duty is not subject to GST.

Credit cards

Annual fees, chargeback fees, air miles conversion administrative fees and statement retrieval fees will be subject to GST.

No GST will be levied if your credit card fee is waived.

Late payment and finance charges (monthly interest) are exempt from GST.

No, they are exempt from GST.

Remittances

Interbank GIRO/ FAST / Telegraphic Transfer are exempted from GST.

Duplicate statement of transactions are subject to GST.

Issuance, collection, amendment and stop payment charges are exempted from GST.

Derivatives

Commission, brokerage and other related service fees on the Derivatives Clearing & Execution Account will be subject to GST.

Others

Rental fees and charges relating to the loss of keys are subject to GST.

Foreign currency exchange transactions are exempted from GST.

Recovery of overseas brokerage

As part of the IRAS GST administrative concession that has been in effect since 1 July 1996, Singapore brokers and banks are able to treat the recovery of overseas brokerage and trade-related overseas cost from the customer as an out-of-scope supply (i.e. GST is not applicable). This administrative concession was in place to ensure that local brokers would be on an equal footing vis-à-vis overseas brokers for GST purposes.

However, with the introduction of the GST Reverse Charge (RC) regime, the IRAS has announced that this GST administrative concession will be removed with effect from 1 January 2023 – as the implementation of the RC regime will ensure parity in GST treatment (i.e. GST would be applied on both local and overseas brokers’ charges).

Where stamp duty/ levy is imposed by a foreign jurisdiction, it will generally be payable by the overseas broker. Custodian nominees of the shares (as the party liable to pay the taxes) will then recover such costs from their local broker.

The local broker’s recovery of the overseas brokerage and overseas-related costs from the customer is therefore a reimbursement, which forms part of the local broker’s primary supply of brokerage service – which is subject to GST.

*The IRAS has communicated that the GST treatment of the recharged stamp duty will also follow that of the local broker’s primary supply of brokerage service and be subject to GST.

STT is not subject to GST.