Goods and Services Tax Act 1993 amended to implement new GST rates

20 December 2022

The Goods and Services Tax Act 1993 (“Act”) has been amended to implement upcoming changes to the goods and services tax (“GST”) rate. The rate will be raised from 7% to 8% from 1 January 2023, and from 8% to 9% from 1 January 2024.

Other changes to the Act will come into force on various dates, with some changes to come into force on a date to be appointed.

The following are some of the other changes to the Act:

  • Update GST treatment for supply of travel arranging services: Currently, the basis for determining whether a supply of travel arranging services is zero-rated or standard-rated depends on factors like the location of the accommodation, or whether the transportation being arranged is international in nature. From 1 January 2023, the GST treatment for a supply of travel arranging services will be based on where the person who contracts for the service and where the person who directly benefits from the service belongs, e.g. if the contractual customer of the service belongs in Singapore, then GST will be charged at the standard rate.
  • Refine rules for taxing low-value goods and imported services under the Overseas Vendor Registration and Reverse Charge regimes: Low value goods are goods valued up to S$400 that are imported via air or post. The changes will prevent double taxation, provide tax certainty and ease the compliance burden for businesses, ahead of the introduction of GST on imported low-value goods and imported non-digital services from overseas suppliers with effect from 1 January 2023.
  • Measures to counter Missing Trader Fraud schemes: Missing Trader Fraud (“MTF”) schemes are schemes used by syndicates where the seller absconds with GST collected on sales without paying the GST over to the Inland Revenue Authority of Singapore (“IRAS”), while businesses further down the MTF chain continue to claim refunds on input GST paid on their purchases from IRAS. Tier 1 offences deal with the more culpable persons such as masterminds and co-conspirators who devise and/or direct such fraud schemes, as well as syndicate members who know they are participating in a fraudulent scheme. This offence carries a maximum imprisonment term of 10 years and/or maximum fine of S$500,000. Tier 2 offences apply to current or former sole-proprietors, partners or directors of business entities that are used in an MTF arrangement. Tier 2 offences target persons such as nominee directors who are typically recruited into such schemes to incorporate entities which are then used by syndicates for fraudulent purposes. This offence carries a maximum imprisonment term of one year and/or maximum fine of S$50,000.

Reference materials

The Goods and Services Tax (Amendment) Act 2022 is available on Singapore Statutes Online sso.agc.gov.sg.