Getting ready for GST changes in 2023

As of 1 January 2023, the GST rate will increase from the current 7 percent to 8 percent.

The increase in GST rates will not only impact cashflow to a certain extent; systems, documents and data automation may also be affected by the change. A few matters to consider in preparation of the change would thus be:

Accounting, Invoicing and Sales Systems
Changes to tax codes and tables
Modification of relevant spreadsheets and automations
Update of sales invoicing formats
Point of Sale system changes
Price lists
Changes to prices listed on websites or product shelves
Modification of internal price lists and product brochures
Contracts
If there is a need for addendums or changes to terms and conditions

As this list is non-exhaustive, thought should be given to potential impact on internal processes, systems, and documentation to ensure a smooth change management.

Transitional rules to take note

The timing of supply continues to be based on the invoicing date or payment date, whichever is earlier.

For any goods/services fully received before 1 January 2023, there is the option to charge GST at the old rate for the full value of goods/services received, even if the time of supply is after 1 January 2023.

For any goods/services partially received before 1 January 2023, there is the option to charge GST at the old rate on the portion of goods/services received before 1 January 2023, even if the time of supply is after 1 January 2023.

Changes to the Overseas Vendor Registration (OVR) regime

Currently, under the OVR regime, any supplier residing outside Singapore having a global turnover exceeding S$1 million; and providing B2C (Business to Consumer*) supplies of digital services to customers in Singapore exceeding S$100,000 for the relevant 12-month period is required to register, charge and account for GST.

With effect as of 1 January 2023, non-digital services and import of low value goods** will also be subjected to the OVR regime. Examples of non-digital services include but are not limited to advisory, professional, consultancy or educational services supplied from outside Singapore.

Explanation of Terms:

*A consumer is defined as a “non-GST registered person in Singapore”

**Low value goods are:

not dutiable goods, or are dutiable goods, but payment of the customs duty or excise duty chargeable on the goods is waived under section 11 of the Customs Act;
are not exempt from GST;
are located outside Singapore and are to be delivered to Singapore via air or post; and
have a value not exceeding the GST import relief threshold of S$400.

issues to consider:

Do any of the business partners or related corporations of the Singapore entity fall under the OVR regime due to the effected changes?
Are there any potential implications on existing contracts if overseas vendors of the company will be required to register for GST?
Do invoices from the GST registered overseas vendors comply with GST regulations for the company to claim input tax?

Travel Agency Services

From 1 January 2023 onwards, travel arrangements by local agents (e.g. travel agencies) will no longer be based on the place of destination.

Travel agency services to customers can only be zero rated if the customer is an overseas person or a GST- registered person in Singapore. This change only applies to the travel agent fees. However, this means holiday travel may become a slightly more expensive affair for individuals.