Come 1 Jan 2023, the Goods and Services Tax (GST) will increase from 7% to 8%. The increase is needed to support our healthcare expenditure, and to take care of our seniors.

To help Singaporeans cope with the impact of the GST increase, the Government rolled out a $6.6 billion Assurance Package earlier this year. In Nov 2022, it was announced that this package would be further enhanced to $8 billion. More details will be shared at Budget 2023.

Singaporean households will also continue to benefit from the permanent GST Voucher Scheme and the absorption of GST for publicly subsidised education and healthcare.

Ahead of the GST rate change, here are 3 things you need to know:

1. Price displays must show new GST rate

From 1 January 2023, the prices displayed by GST-registered businesses must be inclusive of GST at 8% [1]. That is the final price you pay. Businesses that are unable to switch their price display overnight may display 2 prices:

  • One applicable before 1 Jan 2023 showing prices inclusive of GST at 7%
  • One applicable on/after 1 Jan 2023 showing prices inclusive of GST at 8%

An exemption is granted to hotels and F&B establishments[2] that impose service charge on their goods and services. They are not required to display GST-inclusive prices due to an exemption to ease their operations. However, they must still display a prominent statement so that customers are aware that the prices are subject to GST and service charge.

2. Payment date matters

Generally, purchases of goods and services from GST-registered businesses before 1 Jan 2023 will be subject to GST at 7%, and purchases on/after 1 Jan 2023 will be subject to GST at 8%. As a consumer, you may order an item or sign up for services but only pay at a later date. WHEN you pay for the goods and services will determine which GST rate will be charged. 

For transactions that span 1 Jan 2023, GST transitional rules may apply. A transaction spans the GST rate change where one or more of the following events takes place wholly or partially on/after 1 Jan 2023:

  • The issuance of invoice
  • The receipt of payment
  • The delivery of goods or performance of services

[1] When purchasing from 24-hours stores from past midnight on 31 Dec 2022 up to 7 a.m. of 1 Jan 2023, you may be charged GST at 7% on your purchase if it is the supplier’s normal accounting practice to treat the sales made after midnight as sales of the preceding day.

[2] Excluding hotels and F&B establishments that do not impose a service charge, and F&B establishments that levy a nominal service charge without genuine business reasons other than to avoid displaying GST-inclusive prices.

Scenarios that you might find yourself in:

    1. I book a cleaning service from Supplier A on 31 Dec 2022. Supplier A issues the tax invoice to me on the same day, with 7% GST charged. Supplier A provides the cleaning service on 2 Jan 2023, and I make payment on the same day.

    1

    GST is to be charged at 8% on services performed on/after 1 Jan 2023 even though the invoice was issued on 31 Dec 2022. Supplier A may issue a credit note to cancel the original tax invoice with 7% GST charged by 15 Jan 2023, and issue a new tax invoice with 8% GST charged. Alternatively, Supplier A may choose to absorb the additional 1% GST and no additional GST will be collected from you.

     

    2. I subscribe to a music streaming service from Supplier B on 10 Dec 2022. Supplier B issues the invoice to me on the same day, with 7% GST charged for the music streaming service from 10 Dec 2022 to 9 Dec 2023. I make payment on 5 Jan 2023.

    GST is charged at 7% on services performed before 1 Jan 2023 and at 8% on services performed on/after 1 Jan 2023.  Supplier B may apportion the value of the services performed using the number of days as proxy (e.g. 343/365 of the total service fee is subject to 8% GST).

    Supplier B may issue a credit note to cancel the original tax invoice with 7% GST charged by 15 Jan 2023, and a new tax invoice with 8% GST charged. Alternatively, Supplier B may choose to absorb the additional GST and no additional GST will be collected from you.

     

    3. I book a hotel package for my wedding to be held in 2023, on 21 Dec 2022. The price of the package is $8,000 excluding GST. I pay a deposit of $1,070 ($1,000 + $70 GST at 7%) on 28 Dec 2022, with the balance to be paid on 5 Mar 2023.

    3

    GST is charged at 7% on payment made before 1 Jan 2023 and at 8% on payment made after 1 Jan 2023. In this case, 8% GST is chargeable on the remaining unpaid balance of $7,000 (GST-exclusive). Hence, you will need to pay $7,560 on 5 Mar 2023 ($7,000 + $560 GST at 8%).

     

    4. I buy a television from Supplier D on 20 Dec 2022. I sign up for a 10-month instalment payment plan offered by Supplier D from Dec 2022 to Sep 2023. I make the first instalment payment on 20 Dec 2022. Supplier D delivers the television to me on 3 Jan 2023.

    4

    GST is charged at 7% on payment made before 1 Jan 2023. You will pay 7% GST on the first instalment payment before 1 Jan 2023, and 8% on the subsequent instalment payments on/after 1 Jan 2023. However, if the television is delivered to you before 1 Jan 2023, you will pay 7% GST on all the subsequent instalment payments.

     

    5. I signed up for a 3-year course on 1 Jan 2021, which ends on 31 Dec 2023. The course fees are billed on an annual basis at the start of each calendar year. The invoice for the course fees for Year 2023 is issued to me on 15 Dec 2022, with 7% GST charged.

    5

    GST is charged at 7% on payment made before 1 Jan 2023 and at 8% on payment made after 1 Jan 2023. Hence, if you pay Year 2023’s course fees in full before 1 Jan 2023, the applicable GST rate is 7%. However, if you pay Year 2023’s course fees on/after 1 Jan 2023, you will be charged GST at 8%. You should receive a credit note from the course provider to cancel the tax invoice with 7% GST, and a new tax invoice with 8% GST on the unpaid balance.

     

    6. I purchase goods costing over $400 from a GST-registered overseas Vendor E* on 18 Dec 2022. I make full payment for the goods on 31 Dec 2022. The goods are imported into Singapore on 2 Jan 2023.

    6

    GST is charged at 8% on the import of goods over $400 on/after 1 Jan 2023. Hence, you will pay 8% GST to Singapore Customs for the goods imported after 1 Jan 2023.

    *Note: The extension of the Overseas Vendor Registration regime to supplies of low-value goods by GST registered suppliers will take effect from 1 Jan 2023. Low-value goods refer to goods with value not exceeding S$400, and which are located outside Singapore at the point of sale and will be imported via air or post.

     

    3. Unjustified price increases using GST as a cover is unethical

    As a savvy consumer, you should be on the alert when businesses use GST as an excuse to raise prices. It is not acceptable for the business to use the GST increase as the reason for raising prices before the GST rate change, nor is it acceptable for a business to raise prices by more than the GST increase after the GST rate change, citing the GST increase as the reason. 

    You can also check if a business is GST-registered by accessing the Register of GST registered businesses. A GST-registered business should also indicate its GST-registration number on the tax invoices and receipts that it issues.