This alert provides an overview on the GST rate increase and discusses the considerations for businesses in preparation for the increase.
In Budget 2022, the Minister for Finance announced that the GST rate will be increased from 7% to 8% with effect from 1 January 2023 and from 8% to 9% with effect from 1 January 2024.
The raise in GST rate is a necessary and strategic decision to fund Singapore’s revenue needs. Even at 9%, the GST rate remains lower than the average of around 12% in Asia.
While the staggered rate change allows businesses and Singaporeans more time to adjust, it also means additional cost for businesses to prepare for the GST rate change twice. This includes modifying point-of-sale, invoicing, accounting and other systems, and amending price displays. Businesses only have around nine months to prepare for the first GST rate increase on 1 January 2023.
To prepare GST-registered businesses for the first GST rate increase, the Inland Revenue Authority of Singapore (IRAS) has published an e-Tax Guide 2023 GST Rate Change: A Guide for GST-registered Businesses on 18 February 2022 and a list of frequently asked questions that supplements the e-Tax Guide.
