Business Guide: Overall Effects Of 2023 GST Changes On Your Business In Singapore

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2023 GST Changes On Your Business In Singapore

Getting Ready For Your Business

The introduction of the Goods and Services Tax (GST) in Singapore in April 1994 has been a major milestone for businesses operating in the country. The GST is a consumption tax imposed on goods and services consumed in Singapore, and it is charged at every stage of the supply chain.

Since its introduction, the GST rate has been revised several times to keep up with inflation and changing economic conditions. In 2023, the GST rate is set to increase from 7% to 8% (predicted future rate rise to increase up to 9%), and this will have a significant impact on businesses operating in Singapore.

In order to prepare for the upcoming GST changes, it is important for businesses to understand how the changes will affect their operations. The most obvious effect of the GST increase is that prices of goods and services will go up as businesses pass on the additional cost to consumers. This could lead to a decrease in demand for certain goods and services, as consumers may be unwilling or unable to pay the higher prices.

Businesses should also consider how the GST increase will affect their supply chain. For example, businesses that import goods from overseas may have to pay more in taxes due to the higher GST rate. Businesses should also review their pricing strategies to ensure that they are able to remain competitive in the market.

In addition, businesses should review their accounting and bookkeeping processes to ensure that they are able to accurately track GST-inclusive prices, payments and claims. This is especially important for businesses that make frequent purchases from overseas suppliers, as they may be required to pay additional taxes on these purchases due to the higher GST rate.

Finally, businesses should review their marketing strategies to ensure that they are able to effectively communicate the changes to their customers. This will help businesses maintain customer loyalty and ensure that customers are aware of any price increases due to the GST increase.

For Business Partners: IPC Partnership Scheme (BIPS)

Partnering with Business and IPC Partnership Scheme (BIPS) is a great way for businesses to benefit from the upcoming GST changes in Singapore. The scheme allows businesses to partner with an IPC (Inland Revenue Authority of Singapore) approved tax agent, who will provide advice on how to best manage the GST changes. This includes advice on pricing strategies, accounting and bookkeeping processes, and marketing strategies.

The BIPS scheme also provides businesses with access to a range of services such as tax filing assistance, GST registration and deregistration assistance, GST refunds, and more. These services can help businesses save time and money when dealing with the GST changes. Additionally, partnering with an IPC approved tax agent can provide businesses with peace of mind that their taxes are being managed correctly (i.e. with correct rate).

Noticeable Changes With Effect From 1 January 2023 For GST-Registered Businesses

To check whether a business is registered for GST, visit GST Registered Business Search digital service.

Price Displays

One of the most noticeable changes with effect from 1 January 2023 is the requirement for businesses to display prices inclusive of GST. This means that foreign businesses as well as resident businesses must include the GST amount in their price displays, rather than displaying a separate line item for GST. This will help customers understand how much they are paying in taxes and make it easier for them to compare prices between different businesses.

Tax Invoices

Businesses must also issue tax invoices when selling goods or services that are subject to GST. These advance invoices must include the GST amount and be issued within 30 days of the sale. This will help customers understand how much they are paying in taxes and ensure that businesses are accurately tracking their GST payments and claims.

Transitional Rules And Time Of Supply Rules After The Rate Change For GST-Registered Supplier/Customer

Businesses should also be aware of transitional rules and time of supply rules after the rate change. Transitional rules allow businesses to claim input tax credits on purchases made before 1 January 2023, while time of supply rules determine when a business is liable for GST on its price for sales made. Businesses should familiarise themselves with these rules to ensure that they are able to accurately track their GST payments and claims.

What Could Happen To Full Payment Being Received On/ After The Change?

Businesses should be aware that full payment for goods or services received on or after 1 January 2023 must include the new GST rate. This means that customers must pay the higher GST rate on any purchases made after this date, even if they have already paid a deposit before the change. Businesses should also ensure that their invoices are updated to reflect the new rate of GST and that they are able to accurately track their GST payments and claims. Additionally, businesses should review their pricing strategies to ensure that they are able to remain competitive in the market despite the increase in taxes.

What Could Happen To Partially Made Payment Or Delivered Supply Before The Change Takes Place?

If a payment or delivery of goods or services is made in partial payment before the increase in GST rates takes place, businesses will need to calculate the amount of GST payable at the old rate and the new rate. The business should then charge the customer for the difference in GST between the two rates. For example, if a customer pays for half of a purchase before 1 January 2023 and pays for the remaining half after that date, then they will need to pay an additional amount of GST based on the difference between the old and new rates.

What Will Happen To GIRO Deductions And GST Refunds?

GIRO deductions and GST refunds will remain unchanged after the rate change. Businesses can continue to use GIRO deductions to pay their GST liabilities, while GST refunds will be processed in the same manner as before. This means that businesses do not need to take any additional steps when it comes to GIRO deductions or GST refunds.

Frequently Asked Questions

I order a new furniture for my business office and make full payment at the point of order on 28 Dec 2022. The furniture is delivered on 25 Jan 2023. Is GST chargeable at 7% or 8%?

GST will be charged at 7% if the provider receives full payment before January 1, 2023.

On 15 Dec 2022, I receive a tax invoice of $1,000 from a cleaning service company for cleaning services from 15 Dec 2022 to 14 Jan 2023. I make the full payment on 15 Jan 2023. Can I pay 7% GST for the entire service?

On December 15, 2022, a tax invoice will be sent to you that includes GST at a rate of 7%, but will increase the GST payable for services given on or after January 1, 2023, to 8% if payment is received after that date only.

For instance, if services requested beginning January 1, 2023, amount to $800, the supplier will issue:

  • a credit note totaling $856 ($800 plus a GST of 7%, which comes to $56).
  • an invoice for the total amount of $864, including a service fee of $800 and GST of 8% ($64).

GST is still applicable at 7%, with an amount of $200, on services rendered prior to the 1st of January 2023.

Will the cost of non-compliance also change with higher GST?

More significant penalties for non-compliance come with a higher GST rate. This is because penalties are typically based on the amount of unpaid or overstated taxes. For example, there is a 5% late payment fee for underreported or overclaimed taxes.

Read also: 5 Key Things SMEs Need To Know About Being GST-Registered 2021

Read also: You've Heard It Before: Charitable Donations Can Help Your Business With Your Taxes. But How?


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