When 2023 comes rolling through, is your business ready to take on the 8% Goods and Service Tax (GST) hike?
Looking ahead to the new year, Qashier wants to provide clarity on the matter and help you manage this transition, one which is critical to yours and many other businesses.
If your current POS provider hasn’t already prepared you for the change, Qashier stands GST-ready, so we got you covered!
Covid-19 disruptions and the festive season may have overshadowed this news, and some companies might not be ready for the change. 2022 is rapidly coming to a close and before your business gets caught up in planning promotions for the Lunar New Year season, we think it’s important to first prepare for the GST being raised from 7% to 8%.
The main objective for this hike, as stated on IRAS’s website, is to help Singapore cover its healthcare costs and improve its welfare infrastructure for the elderly.
The impact of GST on revenue and operational costs are critical concerns that businesses such as yours will have to navigate.
Here are four things you can do to prepare for its impact, and how Qashier can help your business mitigate the GST hike in 2023.
- Take note of when the new GST rate begins
GST-registered businesses must display new prices with the GST rate at 8% from 1 Jan 2023 onwards. If you cannot switch your price displays overnight, you can display two prices. According to IRAS’s website, the two price displays must reflect the following:
(a) One applicable before 1 Jan 2023 showing prices inclusive of GST at 7%
(b) One applicable on or after 1 Jan 2023 showing prices inclusive of GST at 8%
Hotels and food & beverage (F&B) outlets with service charges need not display GST-inclusive prices for each menu item. However, they must display a statement informing diners that prices shown are subject to GST and service charges. If your F&B establishment has no service or has a nominal service charge, you’re still required to display GST-inclusive prices, or you might be penalised.
In addition, from 1 Jan 2023 onwards, the government will extend GST to imported low-value goods. These goods are imported via air or post and have a value up to and including $400 (the current GST import relief threshold). Additionally, GST will extend to imported non-digital services for business-to-consumer (B2C) companies. If you’re a local vendor that stores your goods outside Singapore, you will be affected by these changes. Currently, local suppliers’ sale of goods warehoused overseas is treated outside the scope of GST. Read more on how this new GST rule will apply to such businesses.
- Understand how the GST rate hike will impact your pricing strategy
It’s important to know that GST-registered businesses need not pass on the GST hike to their consumers. You are liable to account for the new rate to IRAS, but whether you increase prices depends on your pricing strategy.
For companies serving business-to-business (B2B) clients, you’ll have to assess whether your products are price–sensitive. Passing on additional GST increases to a company that is not GST registered means they will not be able to claim them as business expenses. The price increase will affect their costs. Therefore, you’ll need to consider whether you should absorb the rate hike in this scenario.
Customers will likely look for a more affordable supplier if you’re selling competitive, price-sensitive products. Adversely, if you choose to absorb the whole GST amount or just the 1% increase, it can also affect your bottom line. Consider the implications of pricing strategies before deciding whether to absorb the GST rate hike.
- Make relevant changes to systems and processes
Your business needs time to plan, review and adjust financial matters to prepare for the GST rate hike. From procurement to invoicing and accounting systems, take time to do the following:
- Adjust for GST rate chargeable on supplies, taking into account the transitional rules
- Update relevant price displays
- Train staff on the implications of a GST rate hike
- Manage GST risks arising from the transition time of supply rules with additional controls
- Verify if you need to review any contract to clarify the party responsible for bearing GST
- Update your point-of-sale (POS) information to reflect any change in price
Since these matters will take time to execute and implement, we highly recommend getting a headstart before 2023 rolls around.
Whatever your business scope, your current smart POS solution should be well-equipped to handle these new changes. If you haven’t found the right POS solution, look for a dependable smart POS provider who can advise and keep you updated on all these changes. Through providing informative content such as this, Qashier is ready to provide the right guidance and solutions for you to head into the new year smoothly.
- Consider ways to ease the impact of a GST rate hike on your cost
Most GST-registered businesses can recover the GST incurred on their expenses, so a GST rate hike should not drastically affect their costs. However, you do need to consider compliance costs and cash flow costs. Take the appropriate measures to alleviate any impact of a GST hike on these costs. For GST-registered businesses with significant imports, you can consider applying for import GST relief schemes to alleviate the impact on your cash flow.
Other ways to lower costs may be for businesses to purchase big-ticket items before the new GST begins and review their input tax recovery formula. The input tax recovery formula can affect the amount of GST credits businesses can claim. If it’s not accurately reflected, the tax liability on companies can be unjustifiably high.
A higher GST rate means non-compliance and errors can become costly. Understanding and recognising how the GST hike will affect your business will keep you from running afoul of the tax authorities. It will also help you to identify GST cost savings. Read more on the new GST rate changes by referring to the compiled ebook to FAQs by IRAS for the incoming rate change here.
If you’re a business owner, you may realise that the upcoming GST hike requires a review of your business practices.
We know it can be hard to keep track of all the changes in the industry, so we’ve made sure that Qashier is poised to help you take on the new year and this GST hike. We’re here to support you as an extension of your team so that you can focus on what matters most: growing your business.
Consider Qashier’s multiple digital solutions in an all-in-one device for your startup. The smart POS system can handle different operational aspects, from QR code table ordering to table management (F&B), employee management, customer relationship management (loyalty programs), inventory management, data analytics, and cashless payments.
Try the Qashier app for free on your own Android device! Alternatively, you can speak to us to see how Qashier can meet your business needs. Schedule a meeting with us here, call us at (+65) 3165 0155, WhatsApp (+65) 8887 7687, or email [email protected].