5 September 2012
On 3 September 2012, the Inland Revenue Authority of Singapore (IRAS) issued an e-Tax Guide that explains the GST exemption of investment gold, silver and platinum which takes effect from 1 October 2012 as announced in the 2012 Budget Statement by the Deputy Prime Minister and Minister for Finance. It is relevant to businesses which trade in physical gold, silver and platinum (precious metals).
The change is made to recognise that “Investment Precious Metals (IPM)” are essentially financial assets, just like other actively traded financial instruments where supplies are GST-exempt, as well as to facilitate the development of IPM refining and trading in Singapore.
Only precious metals in the form of a bar, ingot, wafer and coin which meet certain criteria can qualify as IPM. 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) for which the supply of non-IPM continues to be taxable. .
The importation and local supply of IPM are GST-exempt with effect from 1 October 2012. The supply of IPM which is exported continues to be zero-rated. Prior to 1 October 2012, the importation and supply of all precious metals are subject to GST.
To qualify for GST exemption, the precious metal must meet all of the following criteria:
1. It is gold of at least 99.5% purity, silver of at least 99.9% purity or platinum of at least 99% purity.
2. It is capable of being traded on the international bullion market.
A precious metal bar, ingot or wafer refined by a refiner with the following accreditation/endorsement is regarded as meeting this criterion:
- For gold and silver, a refiner in the current or former “Good Delivery‟ list of the London Bullion Market Association (LBMA)
- For platinum, a refiner in the current or former “Good Delivery” list of the London Platinum & Palladium Market (LPPM), or
- A refiner who intends to be in the “Good Delivery‟ list of the LBMA (for gold and silver) or LPPM (for platinum) and is endorsed by the International Enterprise (IE) Singapore. Refiners with such endorsement will be published on IRAS website.
3. It bears a mark or characteristic that is internationally accepted as guaranteeing its quality.
4. It trades at a price based on the spot price of the metal it contains.
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.
With the GST exemption of IPM from 1 October 2012, attribution and apportionment of input tax incurred to make exempt supplies of IPM will be required. 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.
To give legislative effect to the changes, amendments will be made to section 8, section 22, section 26 and Fourth Schedule to the Goods and Services Tax Act, and Regulation 13A of the GST(General) Regulations by 1 October 2012.
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.
Source: This article was extracted from the Inland Revenue Authority of Singapore (IRAS) website. Visit www.iras.gov.sg for more information.
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