Companies should be prepared for GST hike on 1 January 2023
Last updated on 25 October 2022
From 1 January 2023, Singapore’s Goods and Services Tax (GST) rate will increase to 8%. A further increase to 9% is scheduled for 1 January 2024. The hike in the GST rate serves to fund Singapore’s revenue and spending needs sustainably.
According to a checklist from IRAS, companies should do the following to prepare for the GST rate increase:
- Update their accounting and invoicing systems to incorporate the new GST rate
- Update their point-of-sales systems to incorporate the new GST rate
- Comply with price display requirements for the new GST rate according to IRAS guidelines
- Make preparations to appropriately apportion the values of goods and services delivered before and on or after 1 January 2023
- Inform their customers of potential GST adjustment to invoices under the GST rate change transitional rules laid out by IRAS
- Review all contracts and agreements to reflect the correct GST rate borne by each party
Although staggering the increase in GST aims to give businesses and Singaporeans more time to adjust, it also increases the cost to businesses to prepare for the rate change twice. Companies should prepare early for the increase where possible, as penalties for non-compliance may be higher due to the higher GST rate. In addition, errors during submission for GST filings will be costlier as penalties are generally imposed based on the value of tax underpaid or over-claimed.
Businesses not ready for the rate change should engage tax advisors or companies providing GST and accounting services in Singapore to hasten their preparations.
