Impact of GST rate changes on businesses

Increase in overall price of products and services

When GST increases, businesses normally pass on additional cost to consumers. This is especially so for businesses that are not GST registered.

This results in the increase in overall price of products and services .

Accounting system reconfiguration

Those entities that are GST registered need to engage their accounting software vendors and IT department to discuss and plan for the rate change configuration for their software. It is important to do the GST rate change earlier as software vendors (For abss accounting software) for example can be overwhelmed from their other customers.

Price Display for Goods and Services

GST registered entities need to ensure they reflect GST inclusive prices on all their price displays eg price tags, price list and online advertisements.

If a business has a large amount of inventory items being listed for sale, it can be challenging to update all at once with effect from 1 January 2023 when GST rate starts to change.

Supplies spanning the GST rate change time frame

IRAS had issued a E tax guide with regard to the guidance on the transitional rules for supplies spanning the rate change and the common scenarios businesses face during this transition.

GST registered businesses need to familiarize themselves with the transitional rules and ensure that the correct GST rate is applied to their supplies.

Businesses need to review their quotations and contracts spanning the rate change to ensure transitional rules are applied correctly.