As we approach 2024, companies should prepare for the upcoming change in the GST rate starting January 1, 2024. The rate will increase from 8% to 9%, which is the final step of the dual rate increment mentioned in the 2022 budget.

Just like last year, we’re here again to explain the main changes and offer a step-by-step guide for managing this GST transition. Although this guide is primarily intended for Algebra’s Clients, we believe it would be helpful to share it with everyone.

If you have any concerns or questions about the changes in the GST rate or any tax-related matters for Singapore, please feel free to contact us without hesitation.

GST rate will increase from 8% to 9%

Businesses that are registered for GST need to get ready for the upcoming rate change. This change might also affect their systems, documents, and automated data processes. To ensure a smooth transition, here are a few things to prepare for the rate increase:

• Make updates to accounting and sales systems.
• Update the format of sales invoices.
• Adjust the Point of Sale system.
• Update price lists.
• Change prices on websites and product shelves.
• Modify internal price lists and product brochures.
• Review contracts.

At ALGBRA, we primarily use the software XERO and QUICKBOOKS ONLINE for our accounting system. These platforms will provide the new GST rates by December 2023. It will be necessary to update the GST codes for existing products/services and recurring invoices. Our ALGEBRA TEAM will handle this task for our clients and will notify them once it’s done.

For DISPLAYED PRICES please be reminded that you should display prices that include GST (like on tags, lists, ads, brochures, and websites). When you mention prices, whether in writing or speaking, they should already have GST included. This way, people will know the total amount they need to pay right away.

There’s a special rule for hotels and places that serve food & drinks. If they add a service charge to what they offer, they don’t have to show prices that include GST for items with service charge. However, they must still clearly tell customers that the displayed prices are subject to both GST and service charge.

TRANSITIONAL RULES FOR LOCAL  SUPPLIERS TO TAKE NOTE

The GST rate to apply continues to be based on the invoicing date or payment date, whichever is earlier, but following exceptions applies.

A supply goes across the change in GST rate from 8% to 9% if one or two of the following events take place completely or partly on or after January 1, 2024:

1. the invoice is raised;
2. Payment is received:
3. Goods are delivered or services are rendered

The transitional rules apply when:

Invoice is raised on or after 1 Jan 2024

• If you raise an invoice on or after January 1st 2024, but you get full payment in 2023, the relevant GST rate on the supply is 8%
• If you didn’t get full payment in 2023 but you fully or partially delivered goods or rendered services in 2023, you can choose to use 8% GST on whichever is more:
  1. The payment received in 2023; or
  2. The value of the delivered goods or rendered services in 2023.

The rest of the supply’s value has 9% GST.
Example,

If you deliver goods in December 2023 and then you raise the invoice and receive the payment in January 2024, you can choose to charge the GST at 8%. You need to inform your customer accordingly and if you already have raised the invoice at 9%, then you need to raise a C.N. consequently

Invoice is raised in 2023

If you have received the full payment in 2023 or you fully delivered goods or rendered services in 2023,  then 8% GST rate applies

For all other situations, 9% GST is used on whichever is less:

1. The payment you have received on or after January 1, 2024; or
2. The value of the goods or services  delivered or rendered on or after January 1, 2024.

Example,

If you raise an invoice in November 2023 for 100 SGD and in December 2023 you get the payment for 30 SGD. Then you get the balance of 70 SGD in January 2024. Under the transactional rule you are required to apply the GST rate of 9% on the amount of 70 SGD.

In this case you need to raise a C.N. for 70 SGD + 8% GST and then raise an Invoice for 70 SGD + 9% GST

We are available to provide further information on GST topics, especially regarding:

• Preliminary analysis and, if necessary, registration for GST management.
• GST accounting management.
• Periodic compliance and GST payment management.