[ TAX FILE ]

GOODS AND SERVICES TAX (GST) RATE CHANGE – TRANSITIONAL RULES

The GST rate will increase from 4% to 5% from 1 January 2004. Here's a brief refresher on the transitional rules.

General rules for charging and reporting GST

GST traders are required to charge and report the GST in their GST returns at the earliest of the three events:

  goods are delivered or services are performed;
  a tax invoice is issued; or
  payment is received.

However, if a delivery of goods or services happens first and a tax invoice is issued within 14 days of the delivery, the tax invoice date is the time to charge and to report the GST in the GST return (14–day rule).

The transitional rules

The Inland Revenue Authority of Singapore (IRAS) has issued the '2004 GST Rate Change - A Guide For GST-Registered Businesses' in November 2003, to assist GST traders with the upcoming change. This guide sets out specific rules on what GST rate to use and when GST is to be reported in the GST return in the transition to the new rate. In a nutshell, transitional rules apply under the following situations:

Delivery of goods and services is made or payment is received before 31 December 2003, but tax invoice is issued after 31 December 2003 – you can charge GST at 4%.

Tax invoice is issued before 31 December 2003, but delivery of goods and services is made and payment is fully or partially received after 31 December 2003 – you need to issue a credit note and a new tax invoice at 5% GST by 14 January 2004.

Cheques presented to banks by 3 January 2004 will be considered as payment received before 1 January 2004.

For enquiries on the transitional rules for the accounting of GST, you may contact the following staff from our GST services:

Mr Chng Chung Hing
DID: 6531 3733      Email : chchng@stoneforest.com.sg

Ms Koh Puay Hoon
DID: 6531 3734      Email : phkoh@stoneforest.com.sg

Mr Kevin Teo
DID: 6531 3731      Email : kevinteo@stoneforest.com.sg