GST rate change: Next steps for businesses

Come 1 January 2024, the GST rate will be raised from 8% to 9%, as part of the two-step GST rate change announced by the Minister for Finance in Budget 2022. The first step from 7% to 8% had taken place earlier on 1 January 2023.

Next steps

To ensure a smooth transition to the new 9% GST rate, all GST-registered businesses are encouraged to do these three things early: 1) Update their systems to incorporate the new GST rate from 1 January 2024; 2) Prepare their price displays to reflect the new GST rate from 1 January 2024; and 3) Understand the GST rate change transitional rules and apply the correct GST rate for sales transactions and reverse charge supplies spanning 1 January 2024.

Businesses should avoid these three common errors:

• Error 1: Charging GST at 9% before 1 January 2024
• Error 2: Charging or displaying GST at 8% on/after 1 January 2024
• Error 3: GST amount is computed correctly but wrong GST rate is reflected on receipts/invoices issued

Communicating reasons for price increases

All businesses are to communicate reasons for any price increases transparently with consumers. Businesses should explain the main reasons for the increases in price/ fee, and not misrepresent the situation to consumers by increasing the price more than necessary, and attributing it primarily or solely to the increase in GST. The Committee Against Profiteering takes a serious view of any unjustified price increases using the GST increase as an excuse and will investigate all feedback on such cases.

For more information on the GST rate change, please refer to the IRAS webpage at go.gov.sg/irasgst-rc-businesses.