As outlined in the 2022 Singapore Budget announcement, the GST rate will increase in two stages:
- from 7% to 8% with effect from 1 January 2023; and
- from 8% to 9% with effect from 1 January 2024.
The GST rate chargeable will be the prevailing rate at the time of supply1. The time of supply will be the earlier of when an invoice is issued or when a payment is received2.
Transitional rule for rate change
A transaction spans a GST rate change when one or more of the following events spans across the date of the rate change:
(i) the issuance of invoice;
(ii) the receipt of payment;
(iii) the delivery of goods or performance of services (for insurance, it can be referred to as the period of insurance)
When you are making payment for your policy, do note that:
1. For policies incepted on or after 1 January 2024, 9% GST will be imposed. However, if full payment is received in 2023, 8% GST will be applied.
2. For policy with period of insurance that crosses over 1 January 2024, the following transitional rules on the applicable GST rate will apply to invoices issued in 2023:
a. 8% GST will be charged for full payment of premium received in 2023.
b. If there was no payment or if only partial payment was received in 2023 and the outstanding premium payment for the policy is made on or after 1 January 2024,
(i) GST rate will be adjusted to 9% on the lower of the two scenarios listed below:
· Outstanding balance (before GST) being the portion of payment not received in 2023; or
· The premium attributable to the unexpired period of insurance on or after 1 January 2024.
(ii) GST rate will remain at 8% for the remaining value of the supply of services.
We will issue a credit note and a new tax invoice to reflect the GST rate adjustment to 9%.
For further information on the GST changes, you may refer to the IRAS e-Tax Guide and FAQ at
https://www.iras.gov.sg/taxes/goods-services-tax-(gst)/gst-rate-change/gst-rate-change-for-business/overview-of-gst-rate-change
1 The time of supply rules are found in sections 11, 11A, 11B and 11C of the GST Act.
2 For more information on the time of supply rules, please refer to the e-Tax Guide “GST: Time of Supply Rules”.
