The GST rate change was proposed as part of the government’s efforts to raise revenue to fund its long-term spending needs, particularly in areas such as healthcare and infrastructure. It is a significant development for businesses in Singapore, as it will impact their prices and operations. GST is a consumption tax that is paid by the end consumer, this means that the GST increase will affect the prices of goods and services in Singapore – which could potentially impact consumer spending.
Companies that are prepared for the GST increase will be able to operate more efficiently and with less risk of non-compliance. The Inland Revenue Authority of Singapore (IRAS) has prepared a checklist for companies to help them prepare for the GST rate change. To ensure a smooth transition, companies can carry out the following:
To ensure that your business remains competitive, it is important to review your prices and revise them if necessary. Companies may decide to keep the GST-inclusive price the same in order to compete in the market by absorbing the increase in GST, resulting in the GST-exclusive price being lower after the GST rate change This is especially important for businesses that operate on thin margins, as a small decrease in prices can have a big impact on their bottom line.
As the GST rate increases, your accounting and invoicing systems will also need to be updated to reflect the new rate in Singapore. This will ensure that you charge GST at the correct rate on your sales invoice. In the event that the accounting system is not updated, you would still have to account for the output tax by using the tax fraction of 8/108 on the total payment received for standard rated supplies (or 9/109 effective from 1 Jan 2024). Companies that are unable to recover the differences from customers will end up having to absorb the rate differential. IRAS may also impose penalties for failure to account for GST on your supplies at the correct rate. And that our professional accountants at Chartsworth will make sure that the GST changes are being implemented in your accounting software.
The GST rate change will also affect your customers, so it is important to communicate the changes to them in a timely and transparent manner. Make sure to inform your customers of any changes to your prices after 1 Jan, and provide them with clear explanations of how the GST rate increase will affect them. This will help to build trust and maintain good relationships with your customers. It is also important that you adhere to the IRAS e-tax guidelines regarding displaying prices that are inclusive of the new GST rate.
Training your staff on the correct application of the GST rate is crucial for ensuring compliance and avoiding costly errors. Your employees need to be aware of the change, and how it will affect the prices of goods and services they are selling or purchasing. This includes understanding the new GST rate calculation and how it is applied to different products, services and transactions. Additionally, employees should be trained on proper invoicing and record-keeping procedures for GST transactions.
As the GST rate changes, it is important to keep detailed records of all GST transactions. This includes invoices, receipts, and other documents that show the GST amounts charged and claimed. Proper record keeping will ensure that your business remains compliant with GST regulations and that you are able to claim GST input tax from the government.
| Payment received | Goods delivered / services performed | GST rate to apply | Remarks |
| Before 1 Jan 2023 | Before 1 Jan 2023 | 7% | 7% GST rate will apply to the supply of goods and services when either of the following conditions are met: (a) Payment in full is received prior to January 1, 2023, or (b) The goods have been fully delivered or the services have been fully performed on or before January 1, 2023 |
| On/after 1 Jan 2023 | |||
| Part before and part on/after 1 Jan 2023 | |||
| On or after 1 Jan 2023 | Before 1 Jan 2023 | ||
| On/after 1 Jan 2023 | 8% | 8% GST rate will be applied to the supply of goods or services if full payment is received and the goods are fully delivered or services fully performed on or after January 1, 2023 | |
| Part before and part on/after 1 Jan 2023 | 7% and 8% | (a) The value of goods delivered before 1 Jan 2023 is subject to 7% GST and (b) The value of part goods delivered after 1 Jan 2023 is subject to 8% GST. | |
| Part before and part on or after 1 Jan 2023 | Before 1 Jan 2023 | 7% | Products are subject to 7% GST when they are fully delivered before 1 Jan 2023. |
| On/after 1 Jan 2023 | 7% and 8% | (a) The value of goods delivered before 1 Jan 2023 is subject to 7% GST and (b) The value of part goods delivered after 1 Jan 2023 is subject to 8% GST. | |
| Part before and part on/after 1 Jan 2023 | 7% and 8% | (a) The lower of the value of the following is subject to 8% GST: (i) partial payment received on or after 1 Jan 2023 or (ii) part goods delivered on or after 1 Jan 2023 and (b) The remaining value of the supply is subject to 7% GST. |
| Payment received | Goods delivered / services performed | GST rate chargeable based on the general time of supply | Can I elect to apply 7% GST? | Remarks |
| Before 1 Jan 2023 | Before 1 Jan 2023 | 7% | Not relevant | Full payment is received before 1 Jan 2023, therefor supply is subject to 7% GST |
| On/after 1 Jan 2023 | ||||
| Part before and part on/after 1 Jan 2023 | ||||
| On or after 1 Jan 2023 | Before 1 Jan 2023 | 8% | Yes | You can elect to apply 7% GST on the full value of supply as goods are fully delivered before 1 Jan 2023. |
| On/after 1 Jan 2023 | No | You cannot elect to apply 7% GST as the goods are delivered on or after 1 Jan 2023. | ||
| Part before and part on/after 1 Jan 2023 | Yes, on part of the supply | You can elect to apply 7% GST on the value of part goods delivered before 1 Jan 2023. The remaining value of the supply (i.e., part goods delivered or part services performed on or after 1 Jan 2023) is subject to 8% GST. | ||
| Part before and part on or after 1 Jan 2023 | Before 1 Jan 2023 | Part payment before 1 Jan 2023 – 7% GST Part payment on/after 1 Jan 2023 – 8% GST | Yes | You can elect to apply 7% GST on the full value of the supply as goods are fully delivered before 1 Jan 2023. |
| On/after 1 Jan 2023 | No | You cannot elect to apply 7% GST as the goods are delivered on or after 1 Jan 2023. | ||
| Part before and part on/after 1 Jan 2023 | Yes, on part of the supply | You can elect to apply 7% GST on the higher of the value of: (i) part payment received before 1 Jan 2023; or (ii) part goods delivered or part services performed before 1 Jan 2023. The remaining value of the supply is subject to 8% GST. |
Navigating the changes of the GST rate increase and applying them to your business can be a challenge. An experienced accounting company like Chartsworth can help to guide you through these changes and so that you stay compliant with the tax requirements of Singapore. This way, you and your team can focus on growing the business, instead of time-consuming day-to-day operations. Our qualified Chartered Accountants (CA) are skilled and knowledgeable and ready to share their expertise.
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Gone are the days where you have to engage different companies just to have an update on your accounting, tax, corporate secretary matters separately. At Chartsworth, we are your one-stop corporate service provider. We would assign an expert accountant to be your main point of contact, ensuring effective communication and increased efficiency in our dealings.
Ditch paperwork and traditional accounting software. We use cloud accounting, offering greater accessibility and scalability to your business. Our monthly accounting plans come with a free XERO cloud accounting subscription. Enjoy having your accounting information at your fingertips to help you make quick and better business decisions.
With Chartsworth, you no longer need to worry about sorting out your monthly financials and missing your compliance deadlines. We would take care of these essential but time-consuming aspects so that you could focus on growing revenue and taking your business to new heights.
The CA (Singapore) designation remains the highest form of professional designation conferred by the Institute of Singapore Chartered Accountant (ISCA). Our team is equipped with up-to-date knowledge and financial expertise to offer advice to your business.
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