IRAS e-Tax Guide

1 GST: Guide on Exemption of investment precious Metals (IPM) (Seventh Edition) IRAS e-Tax Guide GST: Guide on Exemption of investment precious Metals (IPM) Published by Inland Revenue Authority of Singapore Published on 22 May 2018 First edition on 3 Sep 2012 Second edition on 1 Apr 2013 Third edition on 4 Nov 2013 Fourth edition on 1 Apr 2015 Fifth edition on 1 Sep 2016 Sixth edition on 3 Jul 2017 Disclaimers: IRAS shall not be responsible or held accountable in any way for any damage, loss or expense whatsoever, arising directly or indirectly from any inaccuracy or incompleteness in the Contents of this e-Tax Guide , or errors or omissions in the transmission of the Contents. IRAS shall not be responsible or held accountable in any way for any decision made or action taken by you or any third party in reliance upon the Contents in this e-Tax Guide . This information aims to provide a better general understanding of taxpayers tax obligations and is not intended to comprehensively address all possible tax issues that may arise.

2 While every effort has been made to ensure that this information is consistent with existing law and practice, should there be any changes, IRAS reserves the right to vary our position accordingly. Inland Revenue Authority of Singapore All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, including photocopying and recording without the written permission of the copyright holder, application for which should be addressed to the publisher. Such written permission must also be obtained before any part of this publication is stored in a retrieval system of any : Guide on Exemption of investment precious Metals (IPM) TABLE OF CONTENTS 1 Aim .. 1 2 At a glance .. 1 3 Background .. 2 4 investment precious metals .. 2 5 Importation of investment precious metals .. 7 6 Supply of investment precious metals.

3 8 7 Claiming of Input Tax .. 10 8 Other scenarios of investment precious metals supplied or deemed supplied .. 14 9 GST reporting for the importation, purchase and supply of IPM .. 16 10 Contact Information .. 16 11 Updates and Amendments .. 17 Appendix A Sample invoice to customer for an exempt sale of IPM .. 18 Appendix B Illustration on the attribution and apportionment of input tax claims .. 19 GST: Guide on Exemption of investment precious Metals (IPM) 1 1 Aim This e-Tax Guide provides details on the GST exemption of investment gold, silver and platinum which takes effect from 1 Oct 2012. It is relevant to businesses which trade in physical gold, silver and platinum (hereinafter referred to as precious metals ). This Guide covers the following: a)Definition of investment precious metals (hereinafter referred to as IPM );b)GST treatment for the importation and supply of IPM;c)Claiming of input tax incurred for precious metals trading businesses;andd)GST reporting for the importation, purchase and supply of At a glance With effect from 1 Oct 2012, the importation and supply of IPM in Singapore are exempt from GST.

4 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 (hereinafter referred to as 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 provide clarity to your customers and to differentiate exempt supplies of IPM from taxable supplies of non-IPM, you are required to issue an invoice with specific information for an exempt supply of IPM.

5 With the GST exemption of IPM from 1 Oct 2012, you need to attribute and apportion your input tax incurred to make exempt supplies of IPM. 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 ( rental, utilities) that is attributable to the making of taxable supplies is claimable. To give legislative effect to the changes mentioned in paragraphs to , amendments have been made to section 8, 22, 26 and the Fourth Schedule GST: Guide on Exemption of investment precious Metals (IPM) 2 to the GST Act, and regulation 13A of the GST (General) Regulations on 1 Oct 2012. 3 Background Prior to 1 Oct 2012, the importation and supply of all precious metals are subject to GST. In his 2012 Budget Statement, the Deputy Prime Minister and Minister for Finance announced that the importation and supply of precious metals which qualify as IPM will be exempt from GST with effect from 1 Oct 2012.

6 The change is made in recognition that IPM are essentially financial assets, just like other actively traded financial instruments ( stocks, bonds) where supplies are GST-exempt, as well as to facilitate the development of IPM refining and trading in Singapore. 4 investment precious metals precious metals in the form of a bar, ingot, wafer or coin that meet certain criteria, can qualify as IPM. The importation and local supply of IPM are GST-exempt with effect from 1 Oct 20121. Criteria for IPM bar, ingot and wafer To qualify for GST exemption, the precious metal must meet all of the following criteria2: (a) It is gold of at least purity, silver of at least purity or platinum of at least 99% purity. (b) 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: (i) For gold and silver, a refiner in the current or former Good Delivery list of the London Bullion Market Association (LBMA)3; (ii) For platinum, a refiner in the current or former Good Delivery list of the London Platinum & Palladium Market (LPPM)4; or 1 Paragraph 1A of Part I of the Fourth Schedule to the GST Act.

7 2 Paragraph 1(a), 1(b), 1(c) and paragraph 1A of Part II and paragraph 2 of Part III of the Fourth Schedule to the GST Act. 3 Please refer to LBMA s website for its Good Delivery list of gold and silver refiners at 4 Please refer to LPPM s website for its Good Delivery list of platinum refiners. The list can be found at GST: Guide on Exemption of investment precious Metals (IPM) 3 (iii) A refiner which 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. A refiner which intends to or has set up its refining business in Singapore may contact IE Singapore regarding the endorsement on 63376628/ 1800-4377673 or The names of Refiners with IE Singapore s endorsement will be published on IRAS website5. precious metals produced by refiners with LBMA or LPPM accreditation are widely recognised by the industry as having the requisite quality to be traded on international bullion markets.

8 They are also readily accepted for delivery on many international commodities exchanges. Hence, the two accreditations form the basis for the criterion of capable of being traded on the international bullion market . (c) It bears a mark or characteristic that is internationally accepted as guaranteeing its quality. An example of such a mark is the hallmark of a refiner in the Good Delivery list of the LBMA/ LPPM stamped on the bar, ingot or wafer. In addition to the hallmark of the refiner, some bars may also bear the name of specific banks ( Credit Suisse, UBS, Commerzbank, Scotiabank). These bars are commonly known as bank-branded bars and if produced by LBMA or LPPM accredited refiners would qualify for GST exemption. (d) It is not a decorative bar, ingot or wafer or a collector s bar, ingot or wafer. This criterion replaces the previous criterion that the precious metal should be traded at a price based on the spot price of its precious metal content ( spot price criterion )6.

9 The spot price criterion was intended to ensure that only bars, ingots and wafers traded largely for their precious metal contents enjoy GST exemption. Bars, ingots and wafers which are traded based on their rarity or numismatic characteristics are not exempt. However, as most bars, ingots and wafers are sold at a premium ( above the spot price), it is difficult to apply the spot price criterion to determine whether the precious metals are being traded for their metal contents or because of their rarity, aesthetic features or numismatic value. Hence, the revised criterion gives clarity by stating upfront that decorative and collector s bars, ingots or wafers are excluded from GST exemption. Decorative and collector s bars, ingots or wafers are traded at a premium reflective of their rarity, aesthetic or numismatic value in addition to their metal content.

10 Such bars, ingots or wafers are also not in the form ordinarily accepted by the international bullion markets for trading ( they would not satisfy 5 Please refer to > GST > GST-registered businesses > Working out your taxes > When is GST not charged > Supplies Exempt from GST. 6 Amended with effect from 1 Sep 2016. GST: Guide on Exemption of investment precious Metals (IPM) 4 criterion (d)). Some examples of non-qualifying bars, ingots or wafers are7: Bars, ingots or wafers with a hanger or hole (for wearing as a pendant) Odd-shaped bars, ingots or wafers ( boat shape, animal shape, heart-shaped)8 How to determine if a precious metal bar, ingot or wafer qualifies as IPM? You can assess whether a precious metal bar, ingot or wafer meets criteria (a) and (b) in paragraph by examining the physical precious metal . Typically, the following details will be reflected on the surface of the precious metal : (a) the name of the refiner and/or the refiner s hallmark; (b) the purity of the precious metal ; and (c) the type of precious metal ( gold, silver or platinum).