As announced in Budget 2022, the new Singapore GST rate will be increased from 7% to 8% starting on Jan 1 2023, and from 8% to 9% in 2024. According to the IRAS, about 40% out of 100,000 GST-registered businesses will be dealing with a rate change for the first time. Since the last GST hike was in 2007. So most GST-registered businesses should have started preparing for the hike.
How will this GST rate increase affect your business moving forward and how can you remain profitable with the impending GST increase? Read on to find out!
For GST-registered businesses
With the looming GST hike, businesses should be proactive and review their contracts with their suppliers and customers to identify who will shoulder the extra GST cost once the rates increase. Furthermore, it will be ideal to assess necessary changes in the current systems and operations upon application of the GST increase. To aid this transition process, the government has provided various support programs for businesses' convenience – so don't forget to check those out!
For non-GST-registered businesses
Non-GST registered businesses are faced with an additional expense to factor in when managing their finances once the GST increases in 2023. This could be worrying for some struggling businesses, however, there are options that can combat this.
Apply for GST on a voluntary basis
Non-GST registered businesses are unable to recoup GST costs associated with business expenses, with increased expenditure costs and no means to recover these losses. Instead of absorbing these costs or charging them to their customers, businesses can opt to register for GST voluntarily to reclaim these GST charges and avoid price increases for their customers.
However, there are various factors & criteria to consider before applying for GST and we do recommend an in-depth analysis if this is the best strategy for your business.
Effect on Consumer Spending
The GST increase will no doubt create a more challenging environment for businesses as customers will be more financially conscious and more mindful of where they spend their money. Savvy businesses must learn to adapt to their target audience focus and ensure they are offering value at every stage of their buying journey. So they will not miss out on any potential buyers regardless of the GST hike.
Prevent Non-Compliance Penalties
With the imminent GST increase, businesses should expect higher penalties for non-compliance. It can be difficult for business owners to remain up-to-date on compliance requirements. Partnering with an accounting firm is a smart solution that allows you access to experienced professionals and relief from administrative duties while also reducing your chances of incurring hefty fines due to noncompliance.
Please keep in mind that these are not exhaustive options and we will recommend consulting your financial advisors for specific advice regarding your business. Should you require fast print or same-day delivery printing for updating your customers before the GST update next year, please do not hesitate to contact us. As we offer reliable and fast printing service in Singapore.
