Singapore drives changes on GST claims for motor cars & more

2023 has been a year of change regarding Singapore’s GST rates and scope. The Inland Revenue Authority of Singapore has recently published another update regarding GST claims for motor cars - this time relaxing the scope to include related services. 

Fortunately, you don’t have to navigate through the changes in the dark. Here’s what you need to know about Singapore’s latest GST change and how it could impact your business. 

An overview of recent GST claim updates

Singapore’s GST legislation is reviewed periodically to proactively adapt to an ever-changing business landscape. Most recent changes include relaxing the scope for businesses allowed to claim GST. In the past, apart from a few exceptions like taxi operators and driving schools, businesses were not allowed to claim GST on business costs incurred from purchasing a vehicle or the additional running costs. 

However, if you’re a business that offers chauffeur services or cars for hire, turn on your indicator because you’re about to change lanes!

Relaxation of GST claims on purchase and related running expenses of a motor car

As of 1 January 2023, the GST legislation includes GST claims for motor vehicle purchases and related running expenses. This applies to businesses that offer cars for lease or hire or chauffeur services. These claims include additional costs associated to the motor vehicles, such as parking charges. It also extends to transport services for goods, such as food and baggage. Claiming GST, however, is reserved for individuals who meet the following eligibility criteria: 

• Businesses must be registered under the Business Names Registration Act 2014
• Businesses must maintain a fleet of at least three chauffeured private-hire cars and three chauffeurs (including the owner)

As your business may be preparing to submit a return, it’s important to take into account some of the additional changes and updates regarding GST in Singapore. As we’ve mentioned before, 2023 has been jam-packed with updates. 

Singapore breaks 15-year GST rate consistency

Right off the bat, Singapore confirmed that 2023 would be a year of note. Following a 15-year consistency, Singapore’s Minister of Finance confirmed an incremental GST rate increase. The reasoning behind the sudden shift has been a necessary and strategic decision to aid in funding the growing healthcare and social needs of Singapore’s ageing population. The increase from 7% to 9% will follow a phased approach, landing at 9% in January 2024. For now, however, the current GST rate rests at a stable 8% - still considerably lower than the average VAT rate of around 12% across Asia. 

Singapore changes GST rules for non-resident companies

Following the GST rate increase, Singapore announced additional updates and rules concerning the scope for non-established registration for B2C supplies. As of 1 January 2023, Singapore added two new elements to the GST registration scope for non-resident suppliers: non-digital suppliers and the import of low-value goods. This includes B2C services such as professional, consultancy, advisory, or educational outside Singapore. In addition, all B2C supplies of imported digital or non-digital services, that can be provided and received remotely, will be subject to GST. 

Navigate GST changes with experts in your corner

Navigating the new GST changes can be daunting and time-consuming, especially when you have a business to run. To ease the burden of having to decipher new legislation without a moment’s notice - reach out to our VAT IT experts for everything you need to know, to ensure a smooth ride when it comes to GST.