What is GST?
Goods and Services Tax (GST) is a tax that is paid on goods or services consumed domestically, including imports.
GST is a multi-stage tax that is collected at each stage of the production and distribution chain.
- Output GST - the GST that a GST-registered business charges on its local supplies of goods and services. Output GST is collected by the business on behalf of the Government.
- Input GST - the GST that a GST-registered business pays on its purchases of goods and services for business purposes.
To determine the net amount of GST payable by or refundable to the GST-registered business in a given period, the input tax paid is deducted from the output tax collected in that period.
What does GST apply to?
GST is levied on:
a) goods and services supplied in Singapore by GST-registered persons;
b) goods imported into Singapore (unless these goods are exempted from GST e.g. investment precious metals or are granted import relief); and
c) Imported services procured from overseas suppliers. With effect from 1 January 2020, GST is chargeable on business-to-consumer (“B2C”) imported digital services under the overseas vendor registration regime and business-to-business (“B2B”)
imported services by way of a reverse charge.
In general, a supply of goods and services is either taxable or exempt.
Taxable goods and services
A taxable supply is one that is standard-rated or zero-rated.
- Standard-rated supply - GST is chargeable at 9%.
- Zero-rated supply - GST is applied at 0% for the transaction. A GST-registered person charges GST at 0% on his zero-rated supplies, but he can claim the GST paid on his purchases to make those supplies. In Singapore, only exports of goods and international services are zero-rated.
Exempt goods and services
No GST is levied on a supply that is exempt from GST.
- Exempt supply – A GST-registered person does not charge any GST on his exempt supplies and generally cannot claim the GST incurred on goods or services used to make the exempt supplies. In Singapore, the sale and lease of residential properties, financial services, investment precious metals, and digital payment tokens (from 1 January 2020) are exempt from GST.
To learn more about the GST registration process and matters pertaining to the GST registration, please visit the IRAS website.
Why don't we exempt basic necessities from GST?
This is a common suggestion which sounds attractive, but there are two problems:
- Exempting basic necessities is an ineffective redistributive tool, as it does not effectively target support to those with greater needs. It benefits the well-to-do more, because they spend more on everything, including basic necessities.
- A multi-tiered GST system leads to highly arbitrary distinctions between products, and creative efforts by businesses to get their products classified in lower tiers. Examples of disputes in other jurisdictions with multi-tier systems include whether mozzarella pizza toppings should be classified as “cheese” (and charged at a lower GST rate) depending on its vegetable oil content. This makes the system onerous to implement, unnecessarily complicating our GST system and increasing businesses’ compliance costs, which may eventually be passed on to consumers.
We have instead designed a fairer and more effective GST system, tiered by income, such that lower-income households pay a much lower effective GST rate than higher-income households. This is achieved through the permanent GST Voucher Scheme, and GST absorption on publicly subsidised education and healthcare.
Why did we need to raise GST from 7% to 8% in 2023, and from 8% to 9% in 2024?
Our population is ageing. In 2023, about 19% Singaporeans were aged 65 and above. By 2030, this will increase to 25%. We will need to spend more on healthcare to support our seniors. These are our grandparents and parents.
It is important to give our children a good start in life, and provide working parents with better childcare support. We need to spend more to provide accessible, quality, affordable childcare and early childhood education.
The range of threats we face is also wider, ranging from terrorism to cyber-attacks. We need to invest more in security to keep Singaporeans safe.
Thus, more national revenue is required to support higher spending. Raising GST was the prudent and sustainable way to achieve this.
The needs are recurrent and therefore require a recurrent source of revenue.
The increased expenditure will benefit all; it is therefore fair for all to contribute.
How will the Government help to manage increases in cost of living?
We will keep the cost of living manageable and affordable.
The Government will continue to support Singaporeans through subsidies on education, health, housing, and other assistance.
- For more information on the support you are eligible for, you may check out the Support for You Calculator.
The Government will continue to absorb GST on publicly funded education and healthcare.
Keen to find out more? Check out the resources below.
About GST
When was GST introduced in Singapore?GST was introduced in Singapore on 1 April 1994.
What was Singapore’s GST rate over the years?
When GST was introduced in 1994, the rate was 3%. This was increased to 4% in 2003, 5% in 2004, 7% on 1 July 2007, 8% in 2023 and 9% in 2024.
Read also: Frequently-asked questions on Goods and Services Tax (GST)