Your guide to upcoming GST hikes to insurance premiums in Singapore
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As announced by the Minister for Finance in the 2022 Budget, Singapore will be undergoing a GST increase which will be staggered over 2023 and 2024. To help GST-registered businesses navigate the upcoming rate increase, this guide explains the general rules that apply to premium payments during the transition period.
What are the changes?
(i) from 1 Jan 2023, GST increases from 7% to 8%(ii) from 1 Jan 2024, GST increases from 8% to 9%
Based on the Time of Supply Rules*, the GST rate applied to the insurance policy (the supplied goods or services) will be the rate at the time of supply. For instance, if the service provider (the insurer) issues an invoice or receives payment (premium payable) for the insurance policy before 1 Jan 2023, the insurer should charge GST at 7%. On the other hand, if the insurer issues an invoice and receives the premium payable for the policy after 1 Jan 2023, the insurer should apply GST at 8%.There are exceptions to the above, especially for transactions straddling the 01 Jan 2023 deadline, and these are illustrated in the diagram below.
A step-by-step guide to GST applied to transactions straddling 1 Jan 2023
1. Invoice issued before 1 Jan 2023
2. Invoice issued on/after 1 Jan 2023
Generally, Insurers require all premium payments to be paid and received before 01 Jan 2023. If this deadline is missed, the insurer is entitled to reinvoice the premium based on the increased rate of 8%. Having said this, each individual service provider or insurer may have different practices. As such, we strongly encourage all Honan clients and business partners to reach out to their account manager for further guidance.
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Honan Asia Pte Ltd (201015241N), Honan Insurance Group (Asia) Pte Ltd (199303033N), Honan Benefits Pte Ltd (199507177R), Honan Group (Malaysia) Sdn Bhd (201801013064) and all other entities is a composite insurance broker acting as agent for insureds and intending insureds. Honan is not an insurer. The information on this website has been prepared without taking into account your objectives, financial situation or needs. Any advice provided on this website is general advice only. Before making a decision to purchase an insurance policy, please read the relevant Product Disclosure Statement and/or Terms of Business Agreement to make sure the policy is right for you. Insurance cover is subject to policy terms and conditions including policy limits and exclusions.
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