Overview of GST Rate Change
Updated: Oct 20, 2022
Effect on GST-registered businesses – what you need to do
The rate change affects any GST-registered business that sells or purchases goods or services that are subject to the standard rate of GST.
First rate change from 7% to 8%
For any standard-rated supplies of goods or services that you make on or after 1 Jan 2023, you must charge GST at 8%. For instance, if you issue an invoice and receive payments for your supply on or after 1 Jan 2023, you must account for GST at 8%.
If you are a GST-registered business that is subject to reverse charge (“RC business”), you must account for GST at 8% on the services you procure from overseas suppliers (“imported services”) on or after 1 Jan 2023.
However, there are special transitional rules for supplies that span the change of rate. This may affect the GST rate chargeable on the supply.
You may refer to the e-Tax Guide 2023 GST Rate Change: A Guide for GST-registered Businesses (PDF, 663KB) for more information on rate change.
Second rate change from 8% to 9%
The same transitional rules for supplies that span the change of rate will apply when the GST rate is increased from 8% to 9% with effect from 1 Jan 2024. IRAS will provide more details and updates to prepare businesses for the second rate change by Apr 2023.
Effect on non-GST registered business– should you apply for voluntary GST registration?
For non-GST registered businesses, there may be an increase in the cost of goods and services purchased from GST-registered suppliers after the increase in GST rate.
To mitigate the increased business costs arising from the GST rate increase, non-GST registered businesses may wish to apply for GST registration voluntarily so that they may recover the GST incurred on expenses. As voluntarily registered businesses must remain registered for 2 years, businesses should carefully weigh the pros and cons and consider these factors before deciding to apply for GST registration.
Non-GST registered businesses should also bear in mind the additional compliance costs relating to GST rate change if they decide to register before 1 Jan 2024. If the business is unable to bear the additional compliance costs arising from rate change, it should remain non-GST registered or defer its GST registration until on or after 1 Jan 2024.
The following video covers the relevant information on GST registration to help non-GST registered businesses decide whether to register for GST voluntarily in view of the GST rate increase :