What do the Big Four have to say about the Singapore Budget 2022?
Businesses were urged to plan ahead as GST rate hike gets delayed.
Despite a delay in the implementation of the goods and services tax (GST) hike, analysts from PwC Singapore, Deloitte, EY, and KPMG said businesses should not relax and must plan ahead on how to address the looming increase.
The hike implementation, which was originally scheduled in 2022, was moved to 2023. The first increase, an 8% hike, will be implemented on 1 January 2023, whilst the second hike of 9% will be on 1 January 2024.
To prevent companies from raising prices to GST hike, the government said it will also form a committee against profiteering.
Businesses, particularly those not yet GST-registered, should “re-evaluate the costs and benefits of a voluntary GST registration when the GST rate increases on 1 Jan 2023 and 1 Jan 2024,” Kor Bing Keong, GST Leader at PwC Singapore.
Businesses should likewise need to review “their systems, processes and pricing strategy to prepare for the GST rate hike,” Kor said.
"1 January 2023 will arrive faster than you think…Understanding how the transitional GST time of supply rule is also key to avoid costly mistakes,” the expert added.
Deloitte's Richard Mackender, for his part, said businesses will need to get ready to make the necessary changes, "not once, but twice."
"In the broad sense, having to make two lots of system changes will add some costs to businesses because they will need to revisit their systems to adjust during the coming months and again in 2023, so the 2-step increase can be seen more from the perspective of easing the impact on consumers than helping businesses. In addition, the anti-profiteering committee will be there to ensure that unnecessary costs are not passed on, so it is likely that any further cost impact will necessarily be contained within the business environment," Mackender said.
Meanwhile, other experts welcomed the delay of the GST hike and commended the government for doing so.
“The GST rate hike has been a concern for many Singaporeans. Therefore we can see the Government sparing no effort to reassure the people that the enhanced Assurance Package and the enhanced permanent GST voucher scheme would help to buffer the rate increase,” EY’s Yeo Kai Eng said.
KPMG partner Lam Kok Shang, for his part, deferring the hike “will bring some relief to Singaporeans amid concerns over inflation, rising costs of living and a widening inequality.”