Overview of GST Rate Change: 8% to 9% with effect from 1 Jan 2024
In Budget 2022, the Minister for Finance announced that the GST rate will be increased from:
- 7% to 8% with effect from 1 Jan 2023
- 8% to 9% with effect from 1 Jan 2024
The revenue from the increase in GST will go towards supporting our healthcare expenditure, and to take care of our seniors.
GST will go up to 8% on 1 Jan 2023 & 9% from 1 Jan 2024
The Government will delay the planned Goods and Services Tax (GST) hike to 2023 and stagger the increase in two steps, Finance Minister Lawrence Wong said in his Budget speech on Friday (Feb 18). The first increase from 7 per cent to 8 per cent will take place on Jan 1, 2023, and the second increase from 8 per cent to 9 per cent will take place on Jan 1, 2024.
This comes after Prime Minister Lee Hsien Loong said in his New Year message in December that the Government will have to start moving on the planned hike this year, given that the economy is emerging from COVID-19. The plan to raise the GST by two percentage points, from 7 per cent to 9 per cent, was first announced in 2018 during then-Finance Minister Heng Swee Keat’s Budget speech.
Mr Wong said on Friday that the GST hike is necessary to support Singapore’s healthcare expenditure and to take care of its seniors. On the timing, Mr Wong said he has considered the overall situation – the pandemic, the state of Singapore’s economy and the inflation outlook. “Our revenue needs are pressing. But I also understand the concerns that Singaporeans have about the GST increase taking place at the same time as rising prices.”
Singapore to raise GST from 7% to 9% in two stages in 2023 and 2024
The goods and services tax (GST) rate will increase from 7 to 9 per cent in two stages - one percentage point each time on Jan 1, 2023 and Jan 1, 2024. The $6 billion Assurance Package earlier announced in 2020 to cushion the impact of the GST hike will also receive a boost of $640 million, totalling $6.6 billion, said Finance Minister Lawrence Wong on Friday (Feb 18) in his maiden Budget speech.
The delayed GST hike will bring in about 0.7 per cent of gross domestic product in revenue annually - about $3.5 billion - when the full hike is in place in 2024. It will go towards supporting healthcare expenditure and to take care of senior citizens while other areas of social spending rise as well. GST revenue by itself will not be sufficient to cover additional healthcare spending, said Mr Wong. That is why Singapore needs not only the GST increase but also the changes to personal income tax, property tax and vehicle tax which he had announced earlier in his speech, he added.
Where the timing of GST is concerned, Mr Wong said he had carefully considered the overall situation - the ongoing pandemic, the state of the economy and the outlook for inflation. "Our revenue needs are pressing. But I also understand the concerns that Singaporeans have about the GST increase taking place at the same time as rising prices," he said. That is why the GST increase will be delayed to 2023 and the hike will be staggered over two steps - first, from 7 per cent to 8 per cent on Jan 1, 2023; followed by 8 per cent to 9 per cent on Jan 1, 2024.
GST increase to be staggered over 2 years, starting from Jan 2023
The Goods and Services Tax (GST) will be increased progressively, rising to 8 per cent with effect from Jan 1, 2023, and going up again to 9 per cent in 2024, Finance Minister Lawrence Wong announced on Friday (Feb 18).
During his maiden Budget speech, Mr Wong said that the decision to stagger the increase was made in view of the prevailing overall situation, such as the ongoing Covid-19 pandemic and inflation outlook, while balancing them with pressing revenue needs. He assured Singaporeans that the Government will be absorbing the increase for key expenditures to help the public cushion the impact of the hike. Any increase in government fees and charges will be put off by a year from January 2023.
Steps will also be taken to mitigate possible profiteering by businesses during the roll-out of the GST increase. The GST rate has been kept at 7 per cent since July 1, 2007. An increase in this rate from 7 to 9 per cent was first foreshadowed in 2018 during a Budget speech by then-Finance Minister Heng Swee Keat, who said that the increase would happen sometime between 2021 and 2025. In 2020, Mr Heng said that the hike would not take place in 2021 owing to the impact of the Covid-19 crisis on the economy.
Singapore's property tax revenue expected to increase by S$600m due to higher home valuations
Singapore's residential property tax revenue for 2024 is expected to be around S$600 million (US$446 million) higher than what was collected in 2023, said Second Minister for Finance Chee Hong Tat on Tuesday (Feb 6). Around two-thirds of the increase is contributed by non-owner occupied properties, he added.
Mr Chee was responding to parliamentary questions by Leader of the Opposition and Workers' Party chief Pritam Singh, who asked how much additional property taxes the government expects to collect in 2024, following the announcement in November last year that such taxes for most homes would go up again. In a follow-up question, Mr Singh also asked Mr Chee to clarify the difference between the additional S$600 million expected and an estimate given at Budget 2022, when Finance Minister Lawrence Wong said Singapore’s property tax revenue was projected to go up by about S$380 million after a two-step hike to the tax rate.
Mr Chee, who is also Transport Minister, said the higher than expected tax collection for 2024 was largely due to higher annual values (AV), that arose as a result of higher market rentals for residential properties. Property tax is calculated based on AV, which is the estimated annual rent of the property.
Property tax to go up wef 1 Jan 2024
Property tax to go up for most homes again in 2024; government will give one-off rebate of up to 100%
With property taxes for most homes set to rise once more next year, the government will provide a one-off rebate of up to 100 per cent to cushion the impact on affected property owners amid cost-of-living concerns. The rise in taxes involve both Housing Board (HDB) flats and private properties.
Property taxes will go up as market rents and annual values for most residential properties have risen, while property tax rates have also increased for higher-value private residential properties, said the Ministry of Finance (MOF) and the Inland Revenue Authority of Singapore (IRAS) on Thursday (Nov 30). The one-off rebate of up to 100 per cent applies to all owner-occupied residential properties.
The rebate will be tiered “to ensure that our property tax regime remains progressive, and those with greater means pay their fair share of taxes”, said MOF and IRAS. Property taxes for most homes similarly went up in 2023 following a yearly review of properties’ annual values, which are used to compute the tax payable by property owners. The government provided a one-off 60 per cent rebate for all owner-occupied properties then, up to a maximum of S$60 (US$45).
Property taxes for most homes to rise in 2024; Govt to give one-off rebate to cushion impact
Property taxes for most home owners will go up in 2024 because of higher market rents and annual values for most residential properties, as well as an increase in property tax rates for higher-value private homes.
But the Government will provide a one-off rebate of up to 100 per cent for all owner-occupied homes to help cushion the impact of the tax increase amid cost-of-living concerns, the Ministry of Finance (MOF) and Inland Revenue Authority of Singapore (Iras) said in a statement on Nov 30. The annual value of Housing Board flats and most private residential properties will be raised from Jan 1, as part of Iras’ yearly review of properties to calculate how much taxes should be paid, the authorities said. A property’s annual value is its estimated yearly rent if it were to be rented out and is determined based on market rents of comparable properties and other factors.
The annual value is assessed for the purpose of property taxes, which are Singapore’s primary means of taxing wealth and are paid yearly. Iras monitors market rental trends to determine the annual value of properties. Since the last revision of annual values on Jan 1, 2023, market rents have increased by about 20 per cent for HDB and private residential properties, said MOF. As announced in Budget 2022, the second and final step of property tax rate increases will also take effect from Jan 1, with steeper hikes for higher-end properties.
Property Tax Rebate for All Owner-Occupied Residential Properties in 2024
Property taxes (PT) for most residential properties will increase in 2024 due to higher market rents and Annual Values (AVs) for most residential properties, and an increase in PT rates for higher-value private residential properties. Owner-occupied residential properties will receive PT rebates to offset the increases in PT.
The AVs of HDB flats and most private residential properties will increase with effect from 1 January 2024 to reflect the rise in market rents.[1] AV is used to compute the Property Tax (PT) payable by property owners. Please see Annex A-Explaining Annual Values for Property Tax Purposes (PDF, 60KB) for more information on how AVs are assessed for property tax. In addition, as announced at Budget 2022, the second- and final-step of the PT rate increase will take effect from 1 January 2024. The PT rate increase will only affect non-owner-occupied residential properties, and owner-occupied residential properties with an AV of more than $30,000 (i.e. all owner-occupied HDB flats are not affected).
Owner-occupied residential properties will continue to enjoy lower PT rates than residential properties that are rented out. Please see Annex B Progressive Property Tax Rates for Residential Properties Effective 1 Jan 2024 (PDF, 65KB) for the property tax rates in 2024. To cushion the impact of the PT increases, amidst concerns about cost-of-living, the Government will provide a one-off PT rebate of up to 100% for all owner-occupied residential properties as shown below. The rebate is tiered to ensure that our PT regime remains progressive, and those with greater means pay their fair share of taxes.
related:
