Articles

Understanding Singapore’s Tax-exemption on Investment Precious Metals

5 December 2023

Metalor 100 gram gold bars


Singapore is a well-regarded financial center with an open and pro-business economy and one of the world's safest countries. For foreign investors, the country is also a tax haven. Singapore has no capital gains taxes (CGT) nor inheritance taxes.

Since 1 October 2012, the Singapore government has also exempted the Goods and Services Tax (GST), also known as the VAT or sales tax, from bullion defined by the Inland Revenue of Singapore (IRAS) as ‘Investment Precious Metals (IPM).’

Singapore

Why Singapore Removed VAT From Investment-Grade Bullion?

The main reason for removing the value-added tax (VAT) from investment-grade precious metals is to boost its share of trade in the global gold market, making Singapore an Asian gold hub.

Prior to the bullion tax exemption, only 2% of world gold demand flowed through Singapore. The government aimed to increase that to 10% to 15% over the next five to 10 years. Such a change would further augment Singapore’s status as a major financial center.

“Vis-a-vis Dubai, we are a more credible financial center, vis-a-vis Hong Kong, we are seen as not part of China and therefore more neutral”
- Kathy Lai ,Assistant Chief Executive Officer at IE Singapore (2012)

This new tax policy would also bring Singapore’s tax treatment of investment-grade precious metals in line with other developed countries such as Australia and Switzerland.

"We will facilitate the development of gold trading, which can draw on Singapore's strengths as a financial and trading hub, to meet strong demand for investment-grade gold in Asia,"
- Tharman Shanmugaratnam, Finance Minister (2012)

What Is Considered ‘Investment Precious Metal’?

Not all bullion bars and coins are considered Investment Precious Metal, and therefore tax-free.

For a start, only gold, silver, and platinum are considered Investment Precious Metals. Other precious metals like palladium and rhodium continue to be taxable.

Moreover, jewelry, regardless if it is gold, silver, or platinum, is not tax-exempt under this new tax policy. Numismatic products and collectibles continue to be taxable even if they are made of gold, silver, or platinum.

Gold bullion bars

Singapore’s Investment Precious Metal Criteria for Bars, Wafers and Ingots

A precious metal bar, wafer, or ingot must satisfy all of the following criteria in order to qualify for GST exemption.

  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:
    1. For gold and silver, a refiner in the current or former ‘Good Delivery’ list of the London Bullion Market Association (LBMA),
    2. For platinum, a refiner in the current or former ‘Good Delivery’ list of the London Platinum & Palladium Market (LPPM); or
    3. A refiner that intends to be in the ‘Good Delivery’ list of the LBMA (for gold and silver) or LPPM (for platinum) and is endorsed by the Enterprise Singapore.

      Precious metals produced by refiners with LBMA or LPPM accreditation are widely recognized by the industry as having the requisite quality to be traded on international bullion markets. 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”.
  3. 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 (e.g. 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.
  4. It is not a decorative bar, ingot, or wafer or a collector’s bar, ingot, or wafer.

    Some examples of non-qualifying bars, ingots or wafers are:
    • Bars, ingots, or wafers with a hanger or hole (for wearing as a pendant)
    • Odd-shaped bars, ingots, or wafers (e.g. boat shape, animal shape, heart-shaped)

UK Britannia platinum coins

Singapore’s Investment Precious Metal Criteria for Coins

A precious metal coin must satisfy all of the following criteria in order to qualify for GST exemption.

  1. IPM coin is exempt based on criteria similar to those for IPM bar, ingot and wafer. Coins that qualify for GST exemption must be gold of at least 99.5% purity, silver of at least 99.9% purity or platinum of at least 99% purity; and is or was a legal tender in its country of origin.
  2. To provide certainty to businesses, coins (excluding the proof, numismatic or collector’s version) that qualify as IPM are prescribed under the Fourth Schedule to the GST Act. They are:
    1. List of qualifying gold coins
      1. America Buffalo
      2. Australia Kangaroo Nugget
      3. Australia Lunar
      4. Austria Philharmonic
      5. Canada Maple Leaf
      6. China Panda
      7. Malaysia Kijang Emas
      8. Mexico Libertad
      9. Singapore Lion
      10. United Kingdom Britannia (United Kingdom Britannia gold coins minted from year 2013 onwards satisfy the minimum gold purity content of 99.5%)
      11. Canada Call of the Wild series
      12. United Kingdom Lunar
      13. United Kingdom The Queen's Beasts series
      14. Australia RAM Kangaroo
      15. Australia Dragon Rectangular
      16. United Kingdom Royal Arms
      17. United Kingdom Myths and Legends series
      18. United Kingdom The Royal Tudor Beasts series
    2. List of qualifying silver coins:
      1. America Eagle
      2. Australia Kookaburra
      3. Australia Koala
      4. Australia Lunar
      5. Austria Philharmonic
      6. Canada Maple Leaf
      7. China Panda
      8. Mexico Libertad
      9. United Kingdom Britannia (United Kingdom Britannia silver coins minted from year 2013 onwards satisfy the minimum silver purity content of 99.9%)
      10. Armenia Noah's Ark
      11. Australia Kangaroo
      12. Australia Saltwater Crocodile
      13. Canada Birds of Prey series
      14. Canada Wildlife series
      15. United Kingdom Lunar
      16. United Kingdom The Queen's Beasts series
      17. Australia Funnel-Web Spider
      18. Canada Superman™ S-Shield
      19. Canada Tree of Life
      20. South Africa Krugerrand
      21. Australia Dragon Rectangular
      22. United Kingdom Royal Arms
      23. Canada Creatures of the North series
      24. Canada Goose
      25. United Kingdom Myths and Legends series
      26. United Kingdom The Royal Tudor Beasts series
    3. List of qualifying platinum coins:
      1. America Eagle
      2. Australia Koala
      3. Australia Platypus
      4. Canada Maple Leaf
      5. Austria Philharmonic
      6. United Kingdom Britannia
      7. United Kingdom Lunar
      8. United Kingdom The Queen’s Beasts series
      9. Australia Kangaroo
      10. Australia Lunar
      11. United Kingdom Royal Arms
      12. South Africa Big Five series
      13. United Kingdom The Royal Tudor Beasts series
  3. Proof, numismatic and collector’s versions of coins in the prescribed list (e.g. Singapore Lion gold proof coins and Canada Call of the Wild gold proof coins) will not qualify as IPM and thus, are not exempt from GST. Proof, numismatic and collector’s coins are traded at prices largely determined by their rarity, finishing and beauty instead of the precious metals they contain. The importation and supply of such non-IPM coins are taxable.

Bullion coins that are not on the prescribed list do not qualify as Investment Precious Metals and will continue to be taxable.

Can I Buy Taxable Bullion in Singapore Without the Sales Tax?

In most cases, buying taxable bullion without sales tax is possible only because the bullion dealer has taxable bullion inventory stored in a Singapore tax-free zone. As long as the taxable bullion is not brought into Singapore proper, the VAT or sales tax will not be required to be paid.

A good example is Silver Bullion, one of the largest Singapore precious metal dealers, which offers the purchase of taxable bullion that is stored in the tax-free zone in its vault, The Safe House. Customers can buy these bullion and store them without paying the sales tax because The Safe House vault is a recognized bonded warehouse by Singapore Customs.

Conclusion

Singapore's strategic decision to exempt Investment Precious Metals from the Goods and Services Tax marks a significant step in its ongoing efforts to establish itself as a major global financial hub. This policy not only aligns with the city-state's broader economic objectives of attracting international investors and diversifying its financial services sector but also enhances its competitive edge in the global precious metals market.