Unveiling the GST Rate Change Effective 1 January 2024

Important update!

Singapore has implemented a carefully planned phased increase in the Goods and Services Tax (GST) rates to ensure a sustainable approach to supporting national needs. The first step took effect on January 1, 2023, with the tax rate rising from 7% to 8%. Following this, on January 1, 2024, the rate increased again to 9%. This strategic adjustment was designed to bolster government revenue, primarily to address critical areas like healthcare and senior care, ensuring that the nation remains well-equipped to support its ageing population and essential services.

Stay Informed! Keep an eye on prices and payments for goods and services scheduled for delivery in 2024.

Navigating Price Displays Post-GST Rate Increase

For clarity, Goods and Services Tax-registered businesses were required to display prices inclusive of this tax. During the transition, dual prices were allowed:

8% GST for transactions before Jan 1, 2024.
9% GST for transactions on/after Jan 1, 2024.

Hotels and F&B places with service charges had some flexibility but were mandated to convey Goods and Services Tax clearly.

Important Note: Non-compliance could lead to fines, and businesses couldn't charge Goods and Services Tax at 9% before Jan 1, 2024.

Navigating GST Rate Payments: Transitioning Smoothly

Understanding the correct Goods and Services Tax to pay was crucial for businesses and consumers. Before Jan 1, 2024, it was 8%, and after that, it is 9%. Special rules are applied for transactions spanning the rate change.

Impact on Consumers

1. GST Chargeable on Purchases

Before Jan 1, 2024: 8%
After Jan 1, 2024: 9%
If transactions involved events like the issuance of an invoice, payment, or receipt of goods or services spanning Jan 1, 2024, special Goods and Services Tax rules may have applied.

Example 1

On 14 Dec 2023, you purchased goods to be delivered on 10 Jan 2024. You received a tax invoice on 14 Dec 2023, and full payment was received by the supplier on the same day.

Solution:

Goods and Services Tax is chargeable at 8% since full payment was received by the supplier for the goods before 1 Jan 2024.

Unveiling the GST Rate Change Effective 1 January 2024

Business people and bankers with money illustration

Example 2

On 14 Dec 2023, you purchased $500 worth of goods to be delivered on 10 Jan 2024. You received a tax invoice on 14 Dec 2023, and part payment of $200 was received by the supplier on the same day. The remaining payment of $300 will be received by the supplier in 2024.

Solution:

Goods and Services Tax is chargeable at 8% on the part payment of $200 received by the supplier in 2023 and at 9% on the remaining payment of $300 received by the supplier in 2024.

Example 3

You received a tax invoice on 21 Dec 2023 for cleaning services provided to you on 20 Dec 2023. Payment was received by the cleaning service provider on 14 Jan 2024 when the prevailing Goods and Services Tax rate was 9%.

Solution:
GST is chargeable at 8% since you received both the invoice and the services in 2023.

Example 4

You received a tax invoice on December 10, 2023, with an 8% Goods and Services Tax for cleaning services on December 20, 2023, and January 20, 2024. The cleaning service provider received payment on January 20, 2024.

Solution:

Goods and Services Tax is 8% for services in 2023 and 9% for services on/after January 1, 2024. The supplier will give you a credit note to adjust the 8% Goods and Services Tax on the cleaning services received on January 20, 2024. A new bill will be sent to you with 9% Goods and Services Tax for the cleaning service on January 20, 2024.

2. Price Displays by Businesses

Starting Jan 1, 2024, displayed prices had to incorporate a 9% Goods and Services Tax rate.
Dual prices could be used temporarily, but businesses couldn't collect Goods and Services Tax at 9% before Jan 1, 2024.

3. Reporting Wrong GST Practices

Charging and collecting Goods and Services Tax at 9% prior to January 1, 2024
Charging and collecting Goods and Services Tax without proper registration
Failing to comply with price display regulations
Failing to comply with invoicing requirements

Report incorrect practices here.

4. Unfair Price Hikes and GST

Businesses could not blame price increases only on the upcoming Goods and Services Tax change or use the Goods and Services Tax hike as an excuse for raising prices too much afterward. If you notice unjustified price increases, report to the Committee Against Profiteering (CAP).

Final Thoughts

Your cooperation makes the transition smoother! Let us help you unlock the full potential of your SMEs and navigate these changes together. Reach out to us by email at contact@accountingsuperhero.com or connect with us on Facebook or Instagram. We are here to support you and help propel your business growth to new heights!