Singapore GST rate to increase to 8% from January 1, 2023

The long-awaited GST rate rise has been confirmed in the Singapore Budget 2022. The future rate rise had originally been announced in Budget 2018, but a phased approach is now confirmed with the rate of GST first increasing to 8% from January 1, 2023 and then to 9% from January 1, 2024.

Businesses should consider the following issues and impacts:

• Any transitional time of supply rules to ensure that GST is accounted for at the correct rate. This will likely follow the date of the tax invoice but this will be confirmed by rules and guidance published by the IRAS
• Consider the impact on pricing and natural pricing points, and whether the increase in GST is passed onto consumers
• Making required changes to systems – updating rates in the ERP or accounting software, billing systems, ecommerce platforms and EPOS systems. If the business uses a tax engine to automate tax determination (for example, AvaTax), the rate change should be automatic but should still be tested
• Stakeholder awareness – ensuring customers, suppliers and employees are aware of the change and the impact on them and GST sensitive processes. 

As well as Singapore resident businesses, foreign businesses that are registered for GST should also consider the impact and make necessary changes. This includes foreign suppliers of digital services to consumers in Singapore. With any VAT or GST rate rise, the cost of making tax errors increases and therefore this may be the opportune time to carry out a GST review of current compliance processes and the taxability of goods and services.

Keep update of upcoming VAT/GST rate changes with Avalara’s VAT/GST rate tracker.

Contact Avalara's GST experts for assistance with Singapore GST compliance including applying for GST registration.