IRAS issues new e-Tax Guide, “GST: Guide on exemption of investment precious metals (IPM)(5th Edition)”

6 September 2016

On 1 September 2016, the Inland Revenue Authority of Singapore (IRAS) issued the fifth edition of the e-Tax Guide, “GST: Guide on Exemption of Investment Precious Metals (IPM) (5th edition)”.

The e-Tax Guide explains the GST exemption of investment gold, silver and platinum which takes effect from 1 October 2012.  It is relevant to businesses which trade in physical gold, silver and platinum (“precious metals”).

The e-Tax Guide covers the following:

  • Definition of Investment Precious Metals
  • GST treatment for the importation and supply of IPM
  • Claiming of input tax incurred for precious metals trading business, and
  • GST reporting for the importation, purchase and supply of IPM.

With effect from 1 October 2012, the importation and supply of IPM in Singapore are exempt from GST. The supply of IPM which is exported continues to be zero-rated. Only precious metals in the form of a bar, ingot, wafer and coin which meet certain criteria can qualify as IPM. To provide certainty, precious metal coins that qualify as IPM are prescribed in the GST Act.

Precious metals which do not meet the criteria cannot qualify as IPM (“non-IPM”) and the supply of non-IPM continues to be taxable. Examples of non-IPM are jewellery, scrap precious metals, numismatic coins and 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.

To differentiate exempt supplies of IPM from taxable supplies of non-IPM, an invoice with specific information for an exempt supply of IPM will need to be issued to customers.

Under the normal input tax claiming rules, the input tax directly attributable to an exempt sale of IPM is not claimable and only the portion of the residual input tax that is attributable to the making of taxable supplies is claimable.

In this edition, the following were updated:

  • Amendment of paragraphs 4.2(d), 4.5 and 4.8 (Criteria for IPM bar, ingot and wafer)
  • Insertion of qualifying IPM coins in paragraph 4.7 (Criteria for IPM coin)

The previous edition was published on 1 April 2015.

Source: This article was extracted from the Inland Revenue Authority of Singapore (IRAS) website. Visit http://www.iras.gov.sg for more information.

IRAS issues the “GST: GST Guide for the Fund Management Industry (3rd Edition)”

6 September 2016

On 1 September 2016, the Inland Revenue Authority of Singapore (IRAS) issued the third edition of the e-Tax Guide, “GST: GST Guide for the Fund Management Industry (3rd Edition)”.

This Guide explains the GST treatment of the services provided or received by fund managers in the fund management industry.

Fund management services provided by a fund manager (FM) to his client generally include research, investment advice and the preparation of reports. In return for the services performed, the FM is paid a ‘fund management fee’. The FM’s duties are set out in the investment agreements, mandates or trust deeds.

The provision of certain financial services is exempt from GST if the service falls within the description of paragraph 1 of Part I of the Fourth Schedule to the GST Act. The exemption however is not applicable to any arranging, broking, underwriting or advising services in relation to the financial transaction, other than re-insurance services.

Fund management services provided by a GST-registered FM generally do not fall within the description of paragraph 1 of Part I of the Fourth Schedule. Hence, it is subject to GST. Separately, if the FM acts as a principal in the exempt financial transactions (e.g. the FM buys and sells units in his own name), he may be considered as making exempt supplies in respect of such financial transactions. The Comptroller will generally consider a person as a principal if he trades in his own name, assumes ownership of goods or services supplied or bears the risks and rewards arising from a sale or purchase of an investment.

The Guide clarifies the GST treatment of the following scenarios:

  • Fund management services provided to clients other than unit trusts
  • Fund management services provided to unit trusts
  • Distribution services in respect of unit trusts
  • Brokerage services received by FM, and
  • Soft dollar commission.

In the third edition, paragraphs 6.2 and 6.3 were amended to clarify that a stockbroker can only zero-rate his services if both the fund manager and its customer belong overseas.

The previous edition was published on 18 March 2015.

For full details, please refer the e-Tax Guide on the IRAS website.

Source: This article was extracted from the Inland Revenue Authority of Singapore’s (IRAS) website. Visit http://www.iras.gov.sg/ for more information.

IRAS issues e-Tax Guide, “GST: Concession for REITS and Qualifying Registered Business Trusts Listed in Singapore (3rd Ed)”

29 June 2016

On 17 June 2016, the Inland Revenue Authority of Singapore (IRAS) issued the third edition of “GST: Concession for REITS and Qualifying Registered Business Trusts listed in Singapore (3rd Ed)”.

In February 2008, the Minister for Finance had announced enhancements to the 2006 GST concession granted to Real Estate Investment Trusts listed on the Singapore Exchange (S-REITs) and their Special Purpose Vehicles (SPVs). The 2008 concession (“enhanced concession”) was further enhanced in February 2015.

The Guide sets out the qualifying criteria under the enhanced concession as well as the further enhancements made in 2015.

The enhanced concession is currently extended to Singapore-listed Registered Business Trusts (S-RBTs) carrying on qualifying businesses, namely infrastructure business, aircraft leasing, and ship leasing (hereafter referred to as “qualifying S-RBTs”). S-REITs and qualifying S-RBTs are able to claim GST incurred on business expenses, excluding disallowed expenses under Regulation 26 and 27 of the GST (General) Regulations, regardless of whether they are GST registrable or not.

The enhanced concession allows S-REITs and qualifying S-RBTs to treat all supplies made by the multi-tiered structure as if they are taxable or exempt supplies made by the parent S-REIT and qualifying S-RBT for the purpose of computing GST claims. This is regardless of whether the S-REITs and qualifying S-RBTs make taxable supplies.

In February 2015, the Minister of Finance announced an extension of the qualifying period for the enhanced concession to 31 March 2020.

Additionally the enhanced concession was extended to SPVs set up by S-REITs and qualifying S-RBTs solely to raise funds for the business operations of the S-REITs or qualifying S-RBTs (hereafter referred to as “financing SPVs”). Financing SPVs are set up to ring-fence risks associated with the raising of funds through financial instruments such as bonds. As financing SPVs do not hold any qualifying assets, the S-REITs or qualifying S-RBTs could not claim GST on expenses relating to financing SPVs under the enhanced concession.

To facilitate S-REITs and qualifying S-RBTs in raising funds through financing SPVs, the enhancements allow S-REITs and qualifying S-RBTs to claim GST on business expenses incurred to set up financing SPVs and GST on the business expenses of financing SPVs, excluding disallowed expenses. The 2015 enhanced concession applies to GST incurred from 1 April 2015 to 31 March 2020. It is granted based on an additional condition as stated in paragraph 3.1(iv) of the Guide. All other qualifying conditions remain unchanged

Other than editorial changes, the updates made for this edition include:

  • Amendments to paragraphs 4.3 and 4.4 (GST claims for GST-registered S-REIT or GST-registered qualifying S-RBT) and insertion of footnote 9
  • Insertion of paragraph 5 (Attribution and Apportionment of input tax claims) and footnotes 11 to 13 to clarify the input tax attribution and apportionment rules to be applied under the multi-tiered structure
  • Insertion of Appendix 4 (Input tax attribution rules for the purpose of GST concession).

The second edition was published on 31 March 2015.

For further details, please refer to the IRAS’s website.

Source: This article was extracted from the Inland Revenue Authority of Singapore (IRAS) website. Visit http://www.iras.gov.sg for more information.

IRAS issues new guide on “GST: Guidelines on determining the belonging status of supplier and customer”

26 May 2016

On 25 May 2016, the Inland Revenue Authority of Singapore (IRAS) issued a new e-Tax Guide, “GST: Guidelines on determining the belonging status of supplier and customer”.

The belonging status of a person affects the GST treatment of the services supplied or received by him. Specifically, it affects whether a supply of service is considered as made in Singapore and if so, whether the supply can qualify for zero-rating.

This e-Tax Guide aims to help businesses who make supplies of services to or in Singapore determine:

  • whether they are considered as belonging in or outside Singapore, and
  • whether their customers belong in or outside Singapore.

The place where a person belongs depends on where the person has his business establishment or fixed establishment, or if he has no such establishment, where his usual place of residence is.

Generally,

  • if the person has such an establishment only in Singapore, he will be treated as belonging in Singapore.
  • if the person has such establishments both in Singapore and outside Singapore as a supplier of services, the person would be treated as belonging in Singapore if the establishment in Singapore is most directly concerned with the supply.
  • if the person is a recipient of services, he will be treated as belonging in Singapore if his establishment in Singapore is the establishment in which the services are most directly used or to be used.

The e-Tax Guide covers the following areas:

  • Determining where the supplier belongs
  • The customer’s business establishment and fixed establishment
  • Determining where the customer belongs
  • Usual place of residence
  • Frequently asked questions

For further details, please refer to the IRAS’s website.

Source: This article was extracted from the Inland Revenue Authority of Singapore (IRAS) website. Visit http://www.iras.gov.sg for more information.

 

IRAS updates online content on zero-rating of international services

26 May 2016

The Inland Revenue Authority of Singapore (IRAS) has updated its website content on section of “business establishment” for purposes of zero-rating of international services.

Section 21(3) of the GST Act provides for zero-rating relief on a supply of services to the extent that the services are international services.

There are two categories of supplies of services for which the relief may not apply:

  • Where there is a direct connection between the supply of services and goods or land situated in Singapore, the supply cannot be zero-rated.
  • Where there are local persons who stand to derive benefits from their consumption of the services, the supply, too, cannot be zero-rated.

IRAS will treat the business’s customer as having a business establishment in Singapore if:

  • its main seat of economic activity is in Singapore,
  • it carries on business through a branch in Singapore, or
  • it carries on business through an agency in Singapore.

The main seat of economic activity generally refers to the principal place of business, headquarters or head office i.e. the place where the essential decisions concerning the general management of the company are made and where the functions of its central administration are carried out.

The update was made by IRAS on 25 May 2016.

Source: IRAS