IRC clarifies GST confusion

The IRC Acting Commissioner General Dr Alois Daton has clarified some misreporting in relation to Goods & Services Tax claimed by educational institutions and resource company suppliers.

Dr Daton said effective from 1st January 2019, suppliers to resource companies will now charge GST to resource companies who will claim GST input credits in their monthly returns.

“In other words, ‘zero rating’, which previously applied to resource company suppliers has been removed from the GST Act in the 2019 Budget due to abuse of its application.

“Also on GST, provisions in the GST Act which allowed educational institutions to claim GST credits was repealed in the 2018 Budget effective from 1st January 2018.

“This means that although educational institutions are exempt from GST, they cannot charge or claim GST input credits.”

Other points highlighted by Dr Daton include:

  • A supplier contracted to supply educational materials to a school/educational institution can claim a GST input credit and must charge GST but the school receiving the goods cannot claim input credit because it is exempt from GST.
  • A school or educational institution cannot charge GST to a child or parent on top of the cost of tuition fees/project fees.
  • Retail shops or outlets that sell educational (school) materials and uniforms are required to charge GST.

“Any educational institution that provides an educational service is exempt from GST and cannot charge GST or claim GST input credits.

“This tax relief, previously enjoyed by educational institutions was abused through fraudulent claims by individuals and therefore has been stopped.”

Press release