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Guidance: Preparing for GST Rate Change

28 November 2022
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4 min read

You are strongly encouraged to start preparation early for a smooth transition to the new GST rate. For example, you may need to modify your point-of-sale, invoicing, accounting and other systems, as well as your price displays to reflect the new rate.

GST rate to apply

Generally, you should charge GST at the prevailing rate at the time of supply.

Hence, if you issue an invoice or receive payment for your supply before 1 Jan 2023, you should charge GST at 7% on the supply.

Conversely, if you issue an invoice and receive payment for your supply on or after 1 Jan 2023, you should charge GST at 8% on the supply, unless you have elected to charge GST at 7% under the rate change transitional rules subject to the conditions for the election.

Where you are required to charge GST at 8% on the supply on/after 1 Jan 2023, you must account for GST at 8% in your GST return. This is regardless of whether you have collected the GST payment from your customers.

Example: GST to be accounted for on a supply subject to GST at 8% on/after 1 Jan 2023 where GST is collected at 7%

The failure to account for GST on your supplies at the correct rate may attract penalties. Being prepared for GST rate change will help you avoid such increases to your business and compliance costs.

You are not allowed to charge GST at 8% on invoices and payments that are issued or received before 1 Jan 2023.
As a guide, please refer to the Checklist for GST rate change preparation (PDF, 99KB) on the changes that may be required to your systems and business processes to apply the new rate.

You are encouraged to make the necessary changes early to deal with the change in GST rate. This include training your staff to be familiar with the rate change transitional rules and to apply the correct GST rate on your supplies spanning the change of rate.

Price display

 

You must show GST-inclusive prices on all price displays* to the public (e.g. price tags, price lists, advertisements, publicity brochures, website). Prices that are quoted, whether written or verbal, must be GST-inclusive as the public needs to know upfront the final price that they have to pay.

With the GST rate change, all price displays with effect from 1 Jan 2023 must be inclusive of GST at 8%.
If you are unable to change your price displays overnight, you may display two prices:

  1. Prices inclusive of GST at 7%, applicable before 1 Jan 2023; and
  2. Prices inclusive of GST at 8%, applicable with effect from 1 Jan 2023.

*An exception is granted to hotels and food & beverage (F&B) establishments that impose service charge on their goods and services. They are not required to display GST-inclusive prices for goods and services that are subject to service charge to ease their operations. However, they must still display a prominent statement informing customers that the prices displayed are subject to GST and service charge.

The exception does not apply to hotels and F&B establishments that do not impose a service charge. It is also not applicable to F&B establishments that levy a nominal service charge without genuine business reasons other than to avoid displaying GST-inclusive prices. Such businesses are still required to display GST-inclusive prices. Those who do not comply with the price display requirement could be subject to a fine.

 

For more information, you may refer to Displaying and Quoting Prices.

 

 

Funding support for Pre-approved Solutions

You may need to modify your point-of-sale, invoicing, accounting and other systems to apply the transitional rules and implement the new GST rate. For assistance on your systems, please contact your vendors early.
Accounting software and retail management system (e.g., Point-of-Sale Solution) can help you to digitalise your business processes, comply with record-keeping and other tax obligations. For the list of accounting software that meet IRAS’ technical requirements, please refer to IRAS Accounting Software Register.
Businesses that are interested to adopt an accounting or retail management system may apply for the Productivity Solutions Grant. For more information on eligibility conditions, list of supportable pre-approved solutions and how to apply for the grant, please refer to the GoBusiness webpage.

Source: gov.sg

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