The Goods and Services Tax (GST) does not apply to businesses only, but also to non-profit organizations and charities. Even if these entities are not involved in business activities, they are required to register for GST if they attract more than S$1 million in annual taxable supplies or if they expect to make at least that much within the next 12 months. However, there are certain special exceptions to the law.

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Grants, donations, and sponsorships, ideally, should not be taxed. This is the case in Singapore, but there are certain limitations. The law states that income grants, donations, and sponsorships should be given freely – the recipients should not provide benefits to the givers in return for the donations. If benefits are provided, then all the proceeds from the donations are liable for GST.

In case benefits are provided in return for donations and grants, the NGO or charity should account for the GST based on the prevailing tax rate on the open market value for the said benefits. However, it is not always possible to ascertain the open market value of these benefits. In such a case, the tax paid should be 7/107 of the value of the grant, donation, or scholarship.

However, there are cases whereby donations are exempt from GST even when the recipient charity or Institutions of a Public Character (IPC) provides benefits in return for the donation. However, the benefits must be treated as lacking commercial value. Two conditions must be met to prove a lack of commercial value: the charity or IPC must acknowledge that the benefits were provided in return for the donation, and the said benefits should not have a resale value.

Again, as is the case with businesses, responsibility for collecting and remitting GST lies with the charity or NGO. The taxes should be filed and remitted to the Inland Revenue Authority of Singapore (IRAS) quarter-yearly.

Charities and NGOs can also claim input tax from some of their activities, both business and non-business. Input tax is claimable for all business-related activities that are not backed or sponsored by grants, donations, or sponsorships. However, the input tax is subject to the claiming conditions set by the government. Some subsidized activities also have a claimable input tax. If the charity or NGO sells goods and services with partial help and support from donations, grants, and subsidies, then a portion of the proceeds are liable for input tax.

However, most non-business activities do not have a claimable input tax. These are activities of a philanthropic, political, patriotic, or religious nature. Even if money is spent or transacted when carrying out these activities, the resulting input tax is not claimable.

Charities, non-government organizations, and Institutions of a Public Character are afforded universal privileges in Singapore, including tax exemptions on some of their activities. However, even the grants, donations, and sponsorships become liable to taxation in special cases, such as when benefits are provided in return.

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