News

IRAS Reminds Businesses to be Transparent About Price Increases Come 1 Jan 2023

2022-12-24 , 4:26 am

As the year inches to a close, something else inches nearer too.

No, it’s not Chinese New Year or any other high-spirited celebration you’re thinking of.

It’s a lot more dispiriting. It’s the GST hike.

IRAS Reminds Businesses to be Transparent About Price Increases

While the looming GST hike may be dreadful to us, that might not be the case for businesses.

Once the 8 per cent GST rate kicks in, businesses can simply blame it on zheng hu whenever an auntie complains about a hefty price tag. Even when a business raises its prices for other reasons, it could always use the GST hike as a cover.

According to IRAS, some businesses have already been observed to be increasing their prices to account for both the GST hike and other operating costs but have cited mainly the GST hike as the reason for higher prices.

Whether you call it unethical or entrepreneurship, it doesn’t matter because the Inland Revenue Authority of Singapore (IRAS) has just issued an official reminder to businesses to be transparent about the reasons for price increases. If not, they could be subject to an investigation.

Investigations By The Committee Against Profiteering

In its advisory, IRAS shared that businesses unjustifiably increasing prices using the GST hike as a cover will be looked into by the Committee Against Profiteering (CAP).

Essentially, if a business increases its price due to an increase in operating costs, it can’t use the GST hike as an excuse. Businesses also aren’t allowed to use the GST hike as the reason for raising their prices before the implementation of the GST hike.

Join our Telegram channel for more entertaining and informative articles at https://t.me/goodyfeedsg or follow us on Twitter : https://twitter.com/goodyfeed

If a business is caught increasing prices and using the GST hike as a scapegoat, the CAP will come for its head.

The CAP was first set up in 1994 alongside the introduction of GST. It was reconvened earlier this year due to businesses using the GST hike as a cover for unjustified price increases.

Transparency in the Communication of Reasons for Price Increases

IRAS’s advisory also reminds businesses to be transparent when telling consumers the reasons for price increases.

It even sets out some guidelines for how businesses can explain a price increase to consumers.

Businesses are encouraged to share the reason for their price increase, the effective date of the price increase, and the prices before and after the price increase.

Well, just one thing IRAS didn’t take into account: how to manage a stingy auntie demanding a discount anyway.

Price Displays to Show GST-Inclusive Prices

With the GST hike approaching, businesses are also preparing to change their price displays.

If you didn’t know, businesses are expected to display their GST-inclusive prices. Only hotels and F&B establishments imposing service charges on their goods and service need not display GST-inclusive prices.

For other businesses, prices currently displayed include GST at 7%. However, with effect from 1 Jan 2023, prices inclusive of GST at 8% are to be displayed.

This means that while we’re counting down to 2023, someone’s OT-ing in the office updating their price displays.

However, if businesses cannot change their displays overnight, they may display both their pre-GST hike and post-GST hike prices.

So, don’t look at the wrong price tag if you’re shopping on New Year’s.

GST To Be Imposed On Overseas Online Purchases

Talking about GST, here’s one more thing to note: the full 8% GST will be imposed on your online purchases from 1 Jan 2023. Any low-value goods, which are goods that cost less than $400, imported from overseas via air or post will be subject to full GST.

You better check out your Shopee cart now before this kicks in.