Supplies that are exempt from GST include:
The provision of financial services;
The supply of digital payment tokens (with effect from 1 Jan 2020);
The sale and lease of residential properties; and
The import and local supply of investment precious metals (IPM).
GST need not be charged on exempt supplies.
Financial Services
The Fourth Schedule to the GST Act provides the list of financial services that are exempt from GST. Examples of these financial services include:
the exchange of currency (whether effected by the exchange of bank notes, currency notes or coin, by crediting or debiting accounts, or otherwise) other than the supply of a note or a coin as a collector’s item, investment article or item of numismatic interest
Generally, the provision of remittance services is an exempt supply under the Fourth Schedule to the GST Act. If you are earning a commission for providing remittance services to a customer that belongs in Singapore, the amount received is exempted from GST.
However, if you are providing the services to a customer that belongs outside Singapore, it will qualify as an international service under Section 21(3) of the GST Act. This would be treated as a zero-rated supply instead of an exempt supply.
Fees from Arranging or Advising on Financial Transactions
The advising on, arranging, broking, or underwriting of financial activities is not exempt from GST. Such fees are subject to GST when the services are provided to local customers. These fees may be zero-rated when they are provided to overseas customers.
For example, if you are an insurance broker and you receive a commission from an insurance company for arranging a life policy for a local policyholder, you must charge GST at 7% for this service that you provide to the insurance company. You must do so even though the premium of the life policy is exempt from GST.
Digital Payment Tokens
A digital payment token refers to any cryptographically-secured digital representation of value that meets certain criteria.
From 1 Jan 2020, the following supplies of digital payment tokens are exempt from GST:
Exchange of digital payment tokens for fiat currency or other digital payment tokens
Provision of loans of digital payment tokens
The supply of digital payment tokens before 1 Jan 2020 will continue to be treated as a taxable supply of services.
Digital Payment Token Intermediaries
Exemption from GST does not extend to services provided by intermediaries (e.g. an exchange, wallet, broker). These services remain taxable even if these are in relation to digital payment token transactions.
Use of Digital Payment Token as Payment
The use/ provision of digital payment tokens as payment for anything (other than for fiat currency or other digital payment tokens) is disregarded as a supply for GST purposes. Therefore, when digital payment tokens are used to purchase goods and services, GST is chargeable only on the supply of goods and services (where the supply is taxable).
To find out more about exempt supplies, contact us.
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