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Singapore to Increase GST Rate to 9% on January 1, 2024

In a move announced in the 2022 Budget by the Minister of Finance, Singapore is gearing up for a significant adjustment in its Goods and Services Tax (GST) rate. Effective January 1, 2024, the GST rate will rise from its current 8% to 9%. This measure is being implemented to strengthen healthcare expenditure, making it imperative for businesses to prepare diligently and ensure awareness of the impending changes.

Key Implications of the GST Rate Change

1. System Updates for Compliance

To comply with the new GST rate of 9% effective from January 1, 2024, businesses are required to swiftly update their accounting software, invoice systems, cash registers, and point-of-sale systems. Crucially, it is essential to use approved accounting software listed on the IRAS ASR+ website. A new digital service through API is also introduced to facilitate seamless GST return filing. A price inclusive of GST at 9%, applicable from January 1, 2024.

2. Price Display Adjustments

To keep customers informed about the forthcoming 9% GST rate, which becomes effective from January 1, 2024, businesses need to update price displays across all sales channels, including mobile apps, self-ordering kiosks, physical outlets, and online websites. In cases where immediate adjustments are not feasible, businesses can opt for displaying two prices:

  • A price inclusive of GST at 8%, applicable until December 31, 2023.
  • A price inclusive of GST at 9%, applicable from January 1, 2024.

Ensuring transparency is of utmost importance, as any unjustified price hikes linked to the GST change could lead to penalties imposed by the Committee Against Profiteering (CAP).

3. Contractual Adjustments for Post-January 1, 2024 Supplies

The GST rate for supplies is primarily determined by the time of supply. Thus, if an invoice is issued or payment is received on or after January 1, 2024, the GST rate should be set at 9%. Conversely, if the time of supply predates January 1, 2024, the rate remains at 8%. However, for situations where the time of supply spans the rate change date, businesses are obliged to adhere to GST rate change transitional rules. These rules take into account factors such as the issuance of invoices, receipt of payment, and the delivery of goods or services.

For instance, if the invoice is issued, payment is received, and goods are delivered on or after the rate change date, the standard time of supply applies, and the applicable GST rate is 9%. Conversely, if the invoice is issued and payment is received on or after the rate change date but goods are delivered before the rate change, the applicable GST rate remains at 8%, as per the transitional rules.

4. Additional Operational and Compliance Considerations

Businesses registered for GST should be well-informed about various compliance matters, including handling goods and services straddling the rate change, managing rebates, addressing returned or exchanged goods, accounting for goods used privately without consideration, sales occurring on or after midnight on the eve of the rate change date, and the use of simplified tax invoices. A solid grasp of these factors is essential to ensure ongoing compliance.

The impending GST rate hike to 9% on January 1, 2024, underscores the importance of proactive preparations and adherence to the new regulations to help businesses navigate this significant change smoothly.

For more information, please visit IRAS's website.