In a bid to facilitate the development of a refined trading cluster in Singapore, the import and supply of investment-grade precious metals will be exempt from the current 7% GST with effect from October 1, 2012. In addition, measures will be introduced to ease the cash flow of qualifying refiners and local consolidators of precious metals. This will apply to payment of input GST on import and purchase of raw materials used in refining the precious metals into investment-grade form.
“With this GST exemption, the government is recognising that investment-grade gold, silver and platinum (“precious metals”) are essentially financial assets that are actively traded, similar to financial instruments such as stocks and bonds that are currently exempt from GST. It will also ease the compliance costs for the gold industry by removing the documentary requirements to substantiate the export of such precious metals, thereby boosting Singapore’s already business-friendly reputation,” explained Mr. Satish Bakhda, Head of Operations, Singapore company registration specialist Rikvin.
As one of the world’s major international financial center, Singapore is rapidly becoming the place to invest and do business in Asia. The economy is among the fastest-growing in the developed world, corruption is low and the Singapore tax structure is designed to facilitate business and investments. The Republic also benefits from extensive funding opportunities from banking institutions, making it one of the easiest place to set up a company and raise capital for startups. Moreover, there is an efficient central bank and regulatory authority at the top, Monetary Authority of Singapore (MAS), ensuring stable fiscal and monetary policies.
The Inland Revenue Authority of Singapore (IRAS) has clarified that investment-grade gold (in the form of bars, ingots, coins or wafers) must be in purity of 99.5% and above. Meanwhile, investment-grade silver and platinum must be in purity of 99.9% and above, and 99% and above, respectively. Other characteristics differentiating investment-grade from precious metals in other forms include 1) the ability to be traded on the international bullion market, 2) the bearance of a mark guaranteeing its quality, and 3) its tradability at a price based on the spot price of the metal it contains.
Rikvin is optimistic that this recent move is a further testimony to why Singapore is the place for foreign entrepreneurs looking for an alternative safe investment jurisdiction to register a company.
“For anyone interested in international diversification, storing gold overseas is a smart strategy. Come October, Singapore will be the place to go. Furthermore, with credits drying up in western markets, (for example, Spain which has seen shutting down of more than 500,000 small businesses due to credit crunch) investors will move to places where they are treated more favorably,” added Mr. Bakhda.
“Compared to Spain, U.K., U.S. and other western economies, where banks are effectively squeezing small businesses out of the financial sector, Singapore presents a unique opportunity for company incorporation because of the support network offered to businesses here,” Mr. Bakhda concluded.