Singapore aspires to be gold trading hub
Singapore will exempt investment-grade gold and other precious metals from the goods and services tax in a move to turn the city-state into a gold trading hub, the finance minister said on Friday.
Singapore: Singapore will exempt investment-grade gold and other precious metals from the goods and services tax in a move to turn the city-state into a gold trading hub, the finance minister said on Friday.
Finance Minister Tharman Shanmugaratnam said this would bring Singapore's tax treatment of these commodities in line with that of developed countries such as Australia, Britain 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," Shanmugaratnam said in parliament.
"Investment-grade gold and other precious metals are essentially financial assets that are actively traded and are just like other financial instruments that do not attract GST. I will therefore exempt them from GST."
Analysts welcomed the move. "It should add greater incentive for asset managers, especially those in the alternative investments space, to seriously consider Singapore as a location for their operations," said Tan Tay Lek, tax partner at accountancy firm PricewaterhouseCoopers.
"Apart from gold, other non-traditional asset classes the government could look at include antiques, vintage wine, art."
Singapore already is a thriving regional financial centre and wealth management hub.
Justin Harper, head of research at IG Markets Singapore, said gold was in high demand as it was traditionally considered a "safe haven asset" in times of crises.
"The continuing European debt crisis will only help increase this ranking and the search by many for diversification of their investment portfolio," he said.
"The government's exemption of gold and other precious metals from GST acknowledges the importance of gold as secure asset especially in the current climate," added Harper.
Trading volumes for gold have risen sharply and the price of the precious metal shot up from USD 300 an ounce in 2000 to more than USD 1,700 this year, Harper said.
"This move should help put Singapore on a level playing field with other major financial hubs and should boost gold trading here," he said.