Singapore: Guidance concerning GST treatment of fringe benefits

Singapore: GST treatment of fringe benefits

The Inland Revenue Authority of Singapore issued guidance concerning the goods and services tax (GST) treatment of fringe benefits. In general, the GST treatment turns on what constitutes a “business purpose.”

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Singapore’s GST law provides that a taxable person may claim an input tax credit with respect to fringe benefits that are incurred for a business purpose. Previously, what constituted a “business purpose” had been subject to varying interpretations. 

The new guidance (May 2016) provides that a fringe benefit will be considered as incurred for a business purpose if it has a close nexus to the business activities. The guidance provides a list of six items that one or more satisfy the “close nexus” test. Those items are when the fringe benefit:

  • Is necessary for the proper operation of the business
  • Directly maintains or promotes the efficiency of the business operations
  • Is incurred for corporate activities
  • Encourages the upgrading of the employees’ skills and knowledge relevant to the business
  • Is given in recognition of the contribution of employees towards the business 
  • Promotes corporate identity (that is, the corporate image)


Read a June 2016 report [PDF 147 KB] prepared by the KPMG member firm in Singapore

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