My friend runs an insurance agency. He has received incentive payments from insurance companies for the past years. Recently, he was told that the incentive payments attract GST. He has to collect GST from the insurance companies, and pay the GST to IRAS. Because of the unclarity of GST for such payments, he did not collect the GST in the past. To comply with the a recent circular, he has to collect the GST for the past years from the insurance companies. y. He was also levied a fine for failing to obey the GST law.
It will take him some time to collect the GST from the insurance companies - but he paid the GST first to IRAS. After making the pyment, the insurance company can recover the GST back from IRAS. the government. Yes - it is an exercise of futility. It is troublesome and unnecessary work that add to the cost of doing business in Singapore. Many businesses have experienced high operating cost and can only survive by over-charging consumers. It has became a vicious circle.
My friend has approached a senior IRAS officer on this matter to explain that this is an exercise in futility. But the senior officer refuse to make an exception and insisted on following the book. This is quite common in Singapore.
Tan Kin Lian