The Singapore GST increase will happen in two steps: from 7 percent to 8 percent on 1 January next year, then from 8 percent to 9 percent a year later. The Government announced this in Budget 2022 on 18 February 2022. There is still time to prepare, but price lists, quotes and contracts take time to fix.
What was announced
Budget 2022 set out the rise as two smaller steps instead of one. The Government said the extra revenue will help pay for healthcare and support for older citizens.
The dates are fixed. Nothing changes for the rest of this year. The rate stays at 7 percent until the end of December.
The Government also said it will keep absorbing GST on publicly subsidised healthcare and education. Town Councils get extra money to absorb GST on service and conservancy charges. Government fees and charges will not go up for one year from 1 January next year.
What it means for a price tag
A simple example shows the size of the change. Take an item that costs S$100 before GST.
- Today at 7 percent: S$107.00
- From 1 January next year at 8 percent: S$108.00
- A year after that at 9 percent: S$109.00
A customer who pays S$107 today will pay S$109 after the second step. That is about 1.9 percent more on the final bill. The price before GST does not have to change at all.
This matters most for firms that sell to the public, because customers see the final price. It matters less for firms that sell to other GST-registered businesses. Those buyers usually claim the GST back, though your invoice still has to show the right rate.
Which date applies to a sale
For most sales, the supply takes place on the earlier of two dates: when you issue an invoice, or when you receive payment. GST is worked out at that point, and the rate in force on that date is the rate that matters.
IRAS says sales orders and pro-forma invoices are generally not treated as invoices for this purpose. So a quote or order form alone does not lock in a rate.
This basic rule is the starting point for any job that runs across a year end. A deposit paid in December, or an invoice issued just before a change date, may be treated differently from a final payment made after it. IRAS may issue special guidance for sales that straddle a rate change, so check its GST pages before each change date and do not assume.
A practical checklist for small firms
You do not need to act today. A short plan over the coming months is enough.
- Accounting software. Ask your software provider how the new rate will be added and whether it can handle two rates on one date range. Test it before the first change date.
- Price lists and quotes. List every quote or price that stays valid into next year. Decide whether the price is quoted before GST or with GST included, and say so in writing.
- Contracts. Look at long contracts, subscriptions and retainers. Check whether they say "plus GST at the prevailing rate". If they fix a GST-inclusive price, your margin falls when the rate rises.
- Invoice templates. Make sure the rate shown on each invoice matches the date of the supply.
- Staff. Tell the people who issue invoices and handle payments which dates matter.
This is general information, not tax advice. For a complex case, speak to your tax adviser or IRAS.
Should you raise prices or absorb the cost
There is no single right answer. A shop that sells low-margin goods may pass on the full rise. A firm with loyal customers and healthy margins may absorb part of it for a while.
Two points can help. First, a two-step rise is easier to explain than one big jump, so tell customers early. Second, if you quote GST-inclusive prices, be clear that the change comes from the tax and not from your own costs.
Whatever you choose, change prices on a clean date. Mixing old and new prices in the same week causes disputes and refunds.
Support for households
The Government also announced an Assurance Package, topped up by S$640 million to S$6.6 billion in total. It is meant to offset extra GST costs for most Singaporean households for at least five years.
- Cash payouts of S$700 to S$1,600 for adult Singaporeans
- A Seniors' Bonus of S$600 to S$900 for eligible seniors
- Extra U-Save rebates of S$330 to S$570 for eligible HDB households
- MediSave top-ups of S$450 for children and seniors
- Community Development Council vouchers of S$200 in each of the two years after the first step
This support should ease the pressure on consumer spending. It does not remove the need for your own planning.