There will be a $1.4 billion boost to the support package for households to offset the impact of the upcoming goods and services tax (GST) hike, given higher inflation, Deputy Prime Minister Lawrence Wong told Parliament on Monday.
This means that the Assurance Package will now be worth $8 billion, up from $6.6 billion before. The package was first announced in 2020, with a top-up of $640 million announced in Budget 2022.
More details on the enhancements to the package will be announced in Budget 2023, said Mr Wong.
The GST will increase by one percentage point from 7 per cent to 8 per cent on Jan 1, 2023, and another percentage point to 9 per cent on Jan 1, 2024.
The Government had committed to ensuring that the package would offset the impact of the GST increase for the majority of Singaporean households for at least five years, and for lower-income households for about 10 years. Mr Wong said: “The Government will help all Singaporeans adjust to the GST increase, especially the less well-off.”
GST (AMENDMENT) BILL
The Bill proposes to amend the laws related to the GST system, in order to put Singapore in a better position to fund its aspirations and to build a fairer and more inclusive nation, Mr Wong said.
Besides laying out the legislation to allow the staggered GST hike in 2023 and 2024, the Bill also proposes other changes to the way the tax is collected and administered.
1. GST for a supply of travel arranging services
- If the Bill is passed, GST will apply to travel arranging services from Jan 1, 2023
- This includes the arranging and facilitation of international transport, accommodation and travel insurance
- Whether the service is subject to tax will depend on whether the location of the person contracting the service is in Singapore, and where the person who directly benefits from the service belongs
- For example, if the contractual customer of the service belongs in Singapore, GST will be charged at the standard rate
- This would ensure consistent tax treatment for travel arranging services, regardless of whether they are rendered by domestic or overseas providers