SINGAPORE - By now, Singaporeans will be aware of the goods and services tax (GST) rate increase that kicked in with the new year. But that is just one of a number of changes – ranging from taxes on low-value imported goods to Central Provident Fund (CPF) contributions for older workers – that took effect from Jan 1.
The Straits Times looks at eight policy changes to take note of:
1. GST rate up by one percentage point
The GST rate increased from 7 per cent to 8 per cent on Jan 1, as announced during Budget 2022. It will increase to 9 per cent from 2024.
The Government had earlier announced a support package to cushion the impact of the increase on Singaporeans, in particular those from lower-income households.
The Assurance Package was recently given a $1.4 billion boost, meaning it is now worth $8 billion. Deputy Prime Minister Lawrence Wong also said the package will be updated in Budget 2023 to account for higher-than-expected inflation.
2. GST extended to imported low-value goods
The new GST rate now applies to any item valued up to $400 – defined as low-value goods – bought from GST-registered sellers or platforms such as e-commerce sites and imported into Singapore by air or post. Such purchases were previously exempted from GST.
The change aligns taxes for such goods with those brought in via sea or land, which were already subject to GST regardless of item value. GST is already applied to goods above $400 brought in through air or post.
More than 300 overseas vendors, including overseas online marketplaces, have registered for GST under Singapore’s Overseas Vendor Registration regime.
As of January, GST also applies to purchases of all remote services, such as telemedicine, if bought from GST-registered suppliers.
3. Higher property tax rates
Most home owners will pay higher property taxes in 2023, as the authorities have raised the annual value of most residential properties to reflect the rise in rentals.
The annual value of most private residential properties and Housing Board flats was raised from Jan 1, as part of the Inland Revenue Authority of Singapore’s annual review of properties in 2022 to calculate how much tax should be paid.
In addition, property tax rates will increase from 2023, as announced in Budget 2022. This will take effect over two years, with steeper hikes for higher-end properties and those purchased for investment.
4. Lower childcare fees at government-supported pre-schools
Parents with young ones enrolled in government-supported pre-schools will now pay lower fees compared with 2022, with the change benefiting about 100,000 Singaporean children.
These pre-schools receive funding from the authorities and abide by caps to keep their fees affordable. The fee caps have dropped by $40 a month for both anchor and partner operators running full-day childcare and full-day infant care programmes.
Another 22,000 places will also be offered at these facilities by 2024, part of efforts to increase the proportion of places at government-supported pre-schools.
Also, early childhood educators at such pre-schools will see a pay bump of between 10 per cent and 30 per cent from 2023 to 2024.
5. Increased CPF contribution rates for those aged 55 to 70
Employer and employee CPF contribution rates for workers aged 55 to 70 have continued to increase, following the recommendations of the Tripartite Workgroup on Older Workers.
The first increase was implemented in 2022, with the next step now in effect.
The CPF Basic Retirement Sum will also increase by 3.5 per cent per year for CPF members turning 55 from 2023 to 2027. This is to provide them with higher monthly CPF payouts in their retirement years, given the rising standards of living.
About eight in 10 active CPF members aged 55 in 2027 are expected to have at least the Basic Retirement Sum in their accounts, the Ministry of Finance has said.
6. Greater flexibility in transferring CPF savings
Previously, CPF members who turned 65 would see their Ordinary and Special accounts savings transferred to their Retirement Account, up to their cohort’s full retirement sum.
As of January, members can decide to transfer the funds at any time between 65 and 70 years old when they start their monthly payouts, instead of once they are eligible to start their payouts.
This means that those who opt to defer the start of their CPF payouts can let their savings compound for longer. Every year deferred can see one’s payouts increase by up to 7 per cent, said the CPF Board. There is no change to current rules for lump sum withdrawal of CPF savings.
7. Mandatory rest days for migrant domestic workers
Effective Jan 1, all employers must give their domestic workers at least one rest day each month that cannot be compensated with cash. The rest day can be taken on any day of the week, and can be taken as one full day or over two half days.
This arrangement is meant to help domestic workers rest and recharge from work and form networks of support outside the household.
The domestic workers can choose to remain at home during their rest day, and the rest day may be deferred by up to one calendar month, said the Ministry of Manpower.
8. Cut in quota for S Pass holders for certain sectors
Manufacturing, construction, process and marine shipyard firms have had their S Pass quota further lowered to 15 per cent from Jan 1.
This means that no more than 15 per cent of a company’s workforce can be foreign workers holding an S Pass – typically degree or diploma holders earning at least $2,500 – if they belong to these sectors. The quota was lowered from 20 per cent to 18 per cent in 2022.
The move is part of the Government’s ongoing efforts to moderate Singapore’s reliance on foreign labour. Minimum qualifying salaries for S Pass applicants are also being raised in steps between 2022 and 2025.