OSH secures GST exempt treatment of overseas card transaction fees

Following legal submissions made by OSH, the Comptroller of GST has agreed that certain fees levied on overseas transactions by Singapore credit and debit cardholders should be treated as GST-exempt.

While the Comptroller had not yet taken a formal administrative position on the correct GST treatment for this class of transactions, the tentative view he had formed, and which the affected industry players disagreed with, was that the fees in question should be chargeable with GST as a standard rated supply of services. Implementing this position would have required the industry to re-look the economic viability of its current service offerings to cardholders as well as overhaul both its internal and customer-facing systems in order to record, account for and reflect the GST charges.

The representative industry body turned to OSH, in particular seeking to tap on Sim Ho’s deep experience in the area of GST, gleaned from his involvement in the drafting and enacting of the GST Act at the time of its introduction. As the GST treatment of the transaction fees in question concerned a relatively novel legal issue, the Comptroller in preliminary discussions proved to be receptive to a principled exploration of the matter. Importantly, it emerged that the Comptroller was not opposed to the desired treatment per se, but simply saw there being several legal hurdles which would have to be overcome. Having identified these legal hurdles, we were able to address them effectively in our written legal submissions, which, as it turned out, were adequate in securing a positive result for the client.

The success in this case may be largely attributed to two factors. Firstly, the Comptroller’s open-mindedness in considering the correct legal treatment. Taxpayers should thus not treat the Revenue Authority’s initial views as invariably being a fait accompli. Secondly, where there is no applicable decision of the Singapore Courts on a particular issue, the judicious application of relevant case law from foreign jurisdictions can be effective. A good legal analysis is one which exhausts all avenues so as to give the best chance of successful resolution.

For more information, please contact Keith Lam at +65 6804 7565 or kl@ongsimho.com