9 September 2012

The Ministry of Finance (MOF) has accepted for implementation 24 of the 57 suggestions on the draft Goods and Services Tax (Amendment) Bill 2012. The suggestions were received during the public consultation exercise held from 2 to 27 July 2012.
Key suggestions received that were accepted by the MOF are summarised as follows:

• To clearly define the declaration method for hand carry of precious metals into Singapore to facilitate investors who intend to repatriate precious metals stored offshore back to Singapore, bearing in mind that some were bought when the prices of precious metals were cheaper.

MOF responded that at present, there is no change to the import procedures for hand carrying investment-grade precious metals into Singapore, as compared to other goods. To qualify for the new import GST exemption for investment-grade precious metals, importers need to declare an exemption permit which has certain compulsory permit fields, such as type of metal, purity content, name of refiner, name of the coin, value of the goods etc. The importer is to declare the value based on the CIF (cost, insurance and freight) value plus all other chargeable costs, whether or not shown on the commercial invoice.  If an invoice is unavailable, the customs officers may use the current spot rate of the precious metal to determine the value. If the import qualifies as investment-grade precious metals, there is no need to pay GST.

•  To include the Silver American Eagle in the list of GST-exempt coins as they are in purity of 99.9%, which satisfies the minimum purity content specified as ‘investment-grade’.

MOF accepted the suggestion to have the America Eagle (silver) and America Eagle (platinum) included for exemption since they meet the minimum purity 99.9% for silver and 99% for platinum respectively.

• With the change, a supply of investment grade precious metals will be treated as an exempt supply, similar to the supply of financial services. However, it is not clear if an export of investment grade precious metals should be treated as an exempt supply of a zero- rated supply. Based on section 21(2) of the GST  Act,  it would appear that such a supply should be treated as zero-rated. If that is not the case, MOF may wish to consider if it is necessary to amend section 21(2). In addition, a person who makes supplies of financial services specified in paragraph 8(1) of the Fourth Schedule, where such supplies qualify for zero-rating under section 21(3) of the GST Act, is eligible for voluntary GST registration. It is noted there is no amendment to paragraph 8(1) of the First Schedule to allow voluntary GST registration of a person who makes exempt supplies of IGPM that qualify for zero-rating. If the policy intent is to accord the same GST treatment between an exempt supply of investment grade precious metals and an exempt supply of financial services, MOF may wish to consider if it is necessary to amend paragraph 8 of the First Schedule.

The MOF replied that paragraph 8 of the First Schedule of the GST Act will be amended to clarify the voluntary GST registration rules for a person who makes exempt supplies of investment grade precious metals. The MOF also clarified that an export of investment grade precious metals should be zero-rated, and not exempt. There is no need to amend section 21(2) since zero-rating overrides exemption, similar to all other supplies of financial services.

• On the extended scope of zero-rating of prescribed financial services relating to goods situated outside Singapore, it is not clear whether the amended section 21(3)(h) will cover prescribed financial services relating to the goods sold in the course of being imported into Singapore (e.g. title to the goods transfers on the passage to Singapore).

IRAS will provide clarification on its website regarding the place of supply rules for prescribed services relating to goods for export. If the title of the goods is transferred outside Singapore, the supply will be treated as taking place outside Singapore. Prescribed financial services in connection with such supplies can be zero-rated. However, if the goods are imported and then title is transferred, the supply will be treated as taking place in Singapore.  Prescribed financial services in connection with such supplies cannot be zero-rated.

Amongst the suggestions rejected were those that relate to:

• The inclusion of more coins for GST exemption similar to EU/UK’s practice, especially the Gold South Africa Krugerrand and the Gold America Eagle coins which are of purity of 91.6% as well as to add in coin blanks and privately minted silver rounds in the GST exemption scope.
•  The removal of the requirement that investment-grade precious metal bars must be produced by a refiner accredited in the ‘Good Delivery’ list of the London Bullion Market Association (LBMA) or London Platinum & Palladium Market (LPPM) in order for be exempted from GST. This will allow popular and established brands of bars that are wide circulated in the local and international market e.g. NTR, Materion, Sunshine Mint and Credit Suisse to trade in Singapore without GST.
• In the review to allow Comptroller and Minister to set conditions when granting GST remission, there should be a time-barred period for the recovery of the tax remitted, similar to the powers under section 45 of the GST Act relating to the Comptroller’s powers to assess tax due. A broad description of conditions to be set should be provided before remission could be granted in the legislation so as to provide transparency on the nature of conditions that would be imposed.

The remaining suggestions were not accepted for implementation as they are inconsistent with the policy objectives for the proposed legislative changes or legislative drafting conventions. Suggestions accepted will be incorporated into the revised Goods and Services Tax (Amendment) Bill 2012 or IRAS’ e-Tax Guides.

More details of the key changes contained in the draft Goods and Services Tax (Amendment) Bill 2012 can be found here.

Source: Ministry of Finance