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GST Tax Rate Change to 8%: A checklist to prepare for the change
Guidance on Preparing for GST Rate Change has been released by the Inland Revenue Authority of Singapore (IRAS). The GST rate will rise from 7% to 8% on January 1, 2023, and to 9% on January 1, 2024, as stated in the 2022 Budget. The IRAS advises taxpayers to get ready even if the change's law is still in the works. The following are the primary recommendations:
A) GST rate to apply
In general, you must apply GST at the rate in effect at the time of supply. As a result, you must impose a 7% GST charge on the supply if you send an invoice or receive payment for it before January 1, 2023. In contrast, unless you have chosen to charge GST at 7% under the rate change transitional rules pursuant to the requirements for the election, you should charge GST at 8% on the supply if you issue an invoice and receive payment for it on or after January 1, 2023. On invoices and payments that are made or received prior to January 1, 2023, you are not permitted to charge GST at 8%. '
Please use the Checklist for GST rate change preparation (PDF, 99KB) as a guide for any modifications that may be necessary to your systems and operational procedures in order to implement the new rate. To prepare for the change in the GST rate, you are urged to make the required adjustments as soon as possible. This includes educating your personnel about the transitional rules for the rate shift and teaching them how to apply the correct GST rate to your supplies during the rate change.
B) Display Prices
Prices must be displayed on all pricing displays with GST included (e.g. price tags, price lists, advertisements, publicity brochures, website). Prices that are quoted, whether in writing or verbally, must include GST since the general public has to be aware of the whole cost they will be responsible for paying.
All pricing displays beginning on January 1, 2023, must include GST at the new rate of 8%. You may show two prices if you can't change your price displays over night:
i) Prior to January 1, 2023, prices inclusive of GST are 7%;
ii) Beginning January 1, 2023, prices inclusive of GST are 8%.
C) System Update
To apply the transitional regulations and put the new GST rate into effect, you might need to change your point-of-sale, billing, accounting, and other systems. Please get in touch with your vendors early if you need help with your systems.
You can digitalize your business processes, adhere to record-keeping and other tax requirements by using accounting software and retail management systems (such as Point-of-Sale Solution). Please see the IRAS Accounting Software Register for a list of accounting programs that satisfies IRAS' technical specifications.
D) Notification (External & Internal)
Have you informed your customers of the GST increase from 7% to 8% starting from 1 Jan 2023? You may wish to state in your advertisements, websites and brochures that GST would be charged at the rate prevailing at the time of supply. You are strongly encouraged to start preparation early for a smooth transition to the new GST rate.
Have you also started training your staff on the transitional rules for rate change and to apply the correct GST rate for sales transactions and reverse charge supplies spanning the date of rate change?
You may wish to click on the button below to get the complete checklist from IRAS for the GST Rate Change Preparation
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