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Singapore Ready To Become Gold Trading Hub

by Mary Swire, Tax-News.com, Hong Kong

07 September 2012


Following a public consultation, the Inland Revenue Authority of Singapore has announced that the various goods and services tax (GST) amendments, including those announced in the 2012 Budget, designed to facilitate the development of a gold trading hub in Singapore, will take effect from October 1, 2012.

To facilitate the development of gold trading and meet strong demand for investment-grade gold in Asia, the 2012 Budget change proposed that the GST treatment for investment–grade gold, silver and platinum, be put on a par with other actively traded financial assets, such as stocks and bonds.

By providing that exemption from GST, it has been suggested that Singapore’s share of the precious metals market could increase from only 2% at the moment to 10%, or even 15%, in the next five to ten years.

The import and supply of investment-grade gold, silver and platinum, in the form of a bar, ingot, wafer and coin which meet certain criteria, will therefore be exempt from the 7% GST rate, while the supply of precious metals which are exported continues to be zero-rated.

Precious metals which do not meet the criteria continue to be taxable. Examples of non-precious metals are jewellery, scrap precious metals and numismatic coins, and other precious metals which are refined by refiners who are not on the ‘Good Delivery’ list of the London Bullion Market Association or the London Platinum and Palladium Market.

In addition, a new Approved Refiner and Consolidator Scheme (ARCS) is being introduced to relieve cash flow and compliance for qualifying refiners and consolidators of precious metals, and enable them to claim input tax to make the first exempt supply of investment-grade precious metals after refining.

An approved refiner within the ARCS, which will also be implemented from October 1, will, for example, enjoy import GST suspension for the importation of its own goods in the course or furtherance of its business. This will also apply to goods belonging to its overseas principal for supply (either in Singapore or for export), and goods belonging to its overseas principal which will be subsequently be re-exported.

The 7% GST exemption will not apply to the supply of refining activities relating to goods delivered locally. However, an approved refiner can claim all the input tax incurred in the course or furtherance of its business, except for expenses specifically disallowed under the tax code.

TAGS: compliance | tax | investment | business | goods and services tax (GST) | Singapore | tax authority | tax breaks | trade | services

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