Tax changes – GST

Increase the GST rate to meet increased recurrent spending needs

The GST rate increase will be delayed to 2023.

To meet increased recurrent spending needs, The GST rate will be increased in two steps:

  1. From 7% to 8% with effect from 1 January 2023; and
  2. From 8% to 9% with effect from 1 January 2024.

The government will continue to absorb GST on publicly subsidized healthcare and education.

The GST rate has been 7% since 1 July 2007.

Update the GST treatment for travel arranging services

To ensure that the GST system remains resilient in a growing digital economy, with effect from 1 January 2023.

The basis for determining whether zero-rating applies to a supply of travel arranging services will be updated, to be based on the place where the customer (i.e. the contractual customer) and direct beneficiary of the service belong:

  1. If the customer of the service belongs in Singapore, the travel arranging service will be standard-rated; or
  2. If the customer of the service belongs outside Singapore and the direct beneficiary either belongs outside Singapore or is GST-registered in Singapore, the travel arranging service will be zero-rated.

Travel arranging services refer to:

  1. services comprising the arranging of international transport of passengers and the arranging of insurance related to such transportation (currently zero-rated), and
  2. services comprising the arranging of accommodation (currently standard-rated if the property is located in Singapore, and zero-rated if the property is located outside Singapore)

This change will ensure that the GST rules accurately reflect the place of consumption of travel arranging services. The change will also ensure parity in GST treatment between local and overseas suppliers on the supplies of travel arranging services.

The change will not affect the GST treatment of the supply of the underlying travel product such as international air tickets, hotel accommodation and travel insurance.

The IRAS will provide further details on the changes by 31 July 2022.