Transitional Rules for 8% Goods and Services Tax (GST) from 1 January 2023
Last updated on 28 November 2022
The Goods and Services Tax (GST) rate in Singapore will increase from 7% to 8% on 1 January 2023. With the change in the GST rate, companies need to take note of transitional rules for normal and reverse charge supplies, adjustments to contracts and tax previously charged and methods of apportionment. Concurrent with the increase in GST is the imposition of GST on low-value goods (under S$400) and imported non-digital services.
Broadly speaking, companies should take note of the following scenarios:
1) Invoices issued before 1 January 2023, and
- Payment received in full on/after 1 January 2023
- Services completed/goods delivered in full on/after 1 January 2023
In the above scenario, companies should issue a credit note for the invoice and reissue a new invoice to reflect the new GST rate of 8%.
2) Invoices issued on/after 1 January 2023, and
- Payment received in full on/after 1 January 2023;
- Part of the services provided/part of the goods delivered before 1 January 2023.
Generally, all invoices issued on or after 1 January 2023 should charge 8% GST. However, in cases where the contract delivery spans both 2022 and 2023, suppliers can choose to charge GST at 7% for services rendered or goods delivered before 1 January 2023. Any remaining delivery of goods or services performed on or after 1 January 2023 will attract 8% GST.
Companies should prepare for the GST increase by following the checklist here.
Companies unsure of the rate change and its implementation in their businesses should engage tax advisors or companies providing GST and accounting services in Singapore to ensure they comply with the transitional rules.