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  • Service: Tax, Global Indirect Tax
  • Type: Regulatory update
  • Date: 12/12/2013

Singapore – New GST e-Tax Guide – Reimbursement and Disbursement 

GITB Singapore
The Inland Revenue Authority of Singapore (IRAS) recently published an e-Tax Guide entitled “GST: Guide on reimbursement and Disbursement of Expenses”, which provides guidance on the GST treatment applicable to the recovery of expenses.

The guide focuses largely on three areas: indicators of a disbursement (as compared with a reimbursement), the GST treatment applicable to some common types of expense reimbursement, and lastly a concession allowing the claiming of input tax on disallowed expenses when they are recovered from another GST-registered business.


A disbursement is not regarded as a supply and therefore does not attract GST. In its new e-Tax Guide, the IRAS essentially notes that the key determining factor in classifying expense recovery as a disbursement or as a reimbursement is whether the payer has acted as principal or agent with regard to the payment. Only the recovery of amounts paid on behalf of another party, as agent, are regarded as “disbursements”.


For example, if a business acts as the principal in procuring goods and services for another party, generally entering into a contract in its own name with the supplier, any recovery of expenses would be treated as a reimbursement. A number of indicators are offered to businesses to assist them in determining its role as the principle or an agent.


We encourage businesses to read this e-Tax Guide given the prevalence of recovery of expenses. However, for those who have not had an opportunity to go through it in detail, we have outlined below the GST treatment applicable to a number of reimbursement situations discussed in the guide.


  • To the extent that the recovery of an expense is ancillary to or forms part of a primary supply of goods or services, the GST treatment of the recovery of expenses follows that of the primary supply. For instance, if the business incurs overseas freight when supplying goods to a Singapore customer in Singapore, the GST treatment of the overseas freight charges follows that of the supply of goods, which is standard-rated, despite the zero-rating treatment adopted by the service provider for such freight services.

  • On the other hand, if the recovery of expenses is a separate arrangement of procurement and is not ancillary to or forms part of a primary supply of goods or services, the GST treatment would depend on the nature of each item to be recovered. Some exceptions would be the recovery of expenses procured from non-GST registered businesses and financial services, which are exempt. For the former, since the business that recovers the cost is GST-registered, recovery of expenses would be standard-rated if this is the GST treatment when provided by a GST-registered business. For the latter, the recovery of expenses would be standard-rated, unless zero-rating applies, as the business recovering the expenses is not a financial institution.

  • Certain expense recoveries may not be treated as a supply if regarded as compensation and punitive in nature.

Finally, the IRAS has also granted concessions allowing deduction of input tax on expenses which would otherwise not be allowed, provided certain conditions are met.


Against the backdrop of increased audit activities by the IRAS following the introduction of two self-help programs, namely the Assisted Compliance Assurance Programme (ACAP) and the Assisted Self-Help Kit (ASK), this guidance is welcomed by all as it facilitates compliance with Singapore’s GST legislation.


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Global Indirect Tax Brief - December 2013

GITB - December 2013
Global indirect tax brief brief brings together articles on international VAT developments, written by KPMG member firms' VAT professionals worldwide and will be of interest to anyone managing VAT in an international business environment.