The Minister of Finance declared in the 2022 Budget that the GST rate will undergo a two-stage increase, moving from 7% to 8% on January 1, 2023, and further to 9% on January 1, 2024. He stated the cash generated from the GST increase will fulfill our medium-term needs, such as maintaining healthcare costs and taking care of our senior citizens.
The Inland Revenue Authority of Singapore (IRAS) is determined to facilitate all businesses to transition smoothly to the new rate.
In this article, we will discuss what to anticipate for a GST increase in 2024.
What Should I Look for in Price Displays?
GST-registered firms are required to display prices inclusive of GST on their public price displays. The price you see is the final price you pay. GST-registered firms will have to include a 9% GST in their displayed prices from January 1, 2024. Businesses that can’t update their price displays immediately may show two prices:
- One that is valid before January 1, 2024, showing pricing that includes 8% GST
- One that is valid on or after January 1, 2024, showing pricing that includes 9% GST
Hotels and F&B establishments that levy a service charge on their services and products are exceptions. They are not required to display GST-inclusive prices for their services and products that incur service charges.
What Is the Correct GST Rate to Pay?
Generally, you will pay an 8% GST for purchases of goods and services from GST-registered firms before January 1, 2024. For purchases on and after January 1, 2024, a 9% GST applies.
GST transitional regulations might affect transactions carried out between January 1, 2024, and December 31, 2024. A transaction will be considered to span the GST rate change if any of the following events happen entirely or substantially on or after January 1, 2024:
- The supplier issues the invoice
- The supplier receives payment
- The supplier provides goods or performs services
At 24-hour stores from 12 a.m. to 7 a.m., if the supplier’s common accounting practice treats transactions made during this time as sales of the previous day, you might be charged an 8% GST on your purchase on January 1, 2024.
Things to Keep in Mind as the GST Rate Rises from 8% to 9% on January 1, 2024
If you collected only 8% GST on deliveries made on or after January 1, 2024 for reasons such as system update delays, you must still account for a 9% GST in your GST return. To accomplish this, apply the tax fraction of 9/109 to the total amount received for the supply to compute the output tax payable.
Not accounting for GST at the appropriate rate on your supplies might result in penalties. Being prepared for a GST rate increase can help you avoid such hikes in your business and compliance costs.
Therefore, EBOS offers GST services as part of our various services to clients. We take GST submission very seriously. Our services go beyond merely filling out GST forms, as we have staff available round the clock to assist your business.
Contact us today to learn more about our services.
