SUMMARY TABLE ON TAX CHANGES – BUDGET 2012 CHANGES

Note: You may download the summary table, as well as other relevant documents here.

No. / Tax Change / Description and Reason for Change / Amendment to GST Act
1 / GST exemption for investment-grade gold & precious metals / To develop a new refining and trading cluster in Singapore, the import and supply of investment-grade precious metals [“IGPM”, specifically gold, silver and platinum], will be treated as exempt supplies, similar to the supply of financial services.
The GST Act will be amended to:
(i)  exempt the import and supply of investment-grade gold and precious metals from GST; and
GST exemption applies to imports and local sale of precious metal that satisfy the minimum purity content and prescribed attributes of “investment-grade”, namely:
(a)  The exemption applies to bar, wafer, ingot, and coins;
(b)  The purity of gold, silver and platinum should be 99.5%, 99.9% and 99% respectively;
(c)  The IGPM must be capable of being traded on the international bullion market;
(d)  The IGPM bears a mark or characteristic internationally accepted as guaranteeing its quality; and
(e)  The IGPM trades at a price based on the spot price of the metal it contains.
Investment-grade bars, wafers & ingots
To ensure that an investment-grade bar, wafer or ingot can be traded readily in international markets as specified in condition (c), we will exempt those produced by:
(i)  A refiner accredited in the ‘Good Delivery’ List of the London Bullion Market Association (LBMA) in the case of gold and silver; or
(ii)  A refiner accredited in the ‘Good Delivery’ List of the London Platinum & Palladium Market (LPPM) in the case of platinum; or
(iii)  A refiner in Singapore endorsed by IES and that intends to be accredited under (i) or (ii).
The LBMA/LPPM accreditation is widely recognised as the de facto industry standard for quality of precious metal bars and enables the refiner’s output to be readily accepted for delivery on many commodities exchanges.
Investment-grade coins
For investment-grade coins, we will prescribe a list of qualifying bullion coins for GST exemption to give certainty. These coins are regarded by the industry as an alternative investment to bullion bars and are selected using the following criteria:
(i)  Legal tender in their country of issuance;
(ii)  Price is determined largely by spot market and not for numismatic or collector’s value;
(iii)  Have a liquid market for international trading.
(ii) introduce a new Approved Refiner and Consolidator Scheme.
A new GST scheme will also be introduced to ease cash flow of qualifying refiners and consolidators of precious metals in the payment of input GST on import and purchase of raw materials, as well as to relieve input tax on precious metal refining. This will allow approved persons to enjoy the following GST benefits:
(i)  allow input tax claims on expenses directly incurred on refining of IGPM, even though the subsequent supply of IGPM is an exempt supply;
(ii)  allow full input tax claims to approved refiner to ease compliance, recognising that he is substantially in business of precious metals refining; and
(iii)  allow GST suspension on imports and local purchases of approved refiners and on imports of approved consolidators for inputs to refineries.
For more information on the new GST scheme, please refer to the draft Goods and Services Tax (General) (Amendment) Regulations 2012.
The above changes were announced in Budget 2012 and will take effect from 1 Oct 2012. IRAS will publish a circular to explain the changes and operational details by 1 September 2012. / Sections 8, 20, 22, new 37B, 41 & Fourth Schedule
[Clauses 2, 3, 5, 8, 9 & 11]