Goods and Services Tax or GST is a broad-based consumption tax levied on the import of goods (collected by Singapore Customs), as well as nearly all supplies of goods and services in Singapore. GST exemptions apply to the provision of most financial services, the sale and lease of residential properties, and the importation and local supply of investment precious metals. Goods that are exported and international services are zero-rated.
Businesses Required to Register for GST-Jeweler
As a business, you must register for GST when:
- Your taxable turnover for the past 12 months ending Mar, Jun, Sep or Dec (referred to as “quarter”) is more than $1 million; or
- You are making or intend to make taxable supplies and you can reasonably expect your taxable turnover in the next 12 months to be more than $1 million (e.g signing of a sales contract or business agreement)
If your business does not exceed $1 million in taxable turnover, you may still choose to voluntarily register for GST after careful consideration.
Charging and Collecting GST
Once you have registered for GST, you must charge GST on your supplies at the prevailing rate. This GST that is charged and collected is known as output tax . Output tax must be paid to IRAS.
The GST that you incur on business purchases and expenses (including import of goods) is known asinput tax . If your business satisfies the conditions for claiming input tax, you can claim the input tax on your business purchases and expenses.
Paying Output Tax and Claiming Input Tax Credits
As a GST-registered business:
- You must submit your GST return to IRAS one month after the end of each prescribed accounting period. This is usually done on a quarterly basis.
- You should report both your output tax and input tax in your GST return.
- The difference between output tax and input tax is the net GST payable to IRAS or refunded by IRAS.
A GST registered jeweler can charge and account for GST in the following cases;
1. When an invoice is issued or
2. When payment is made
Sale of gold
Upon 90 days from the delivery of the gold, the jeweler should issue a tax invoice and account for output tax if no payment is received before the issuance of the tax invoice. If the price is not fixed till the 90th day , the jeweler needs to account for output tax based on the open market value of gold on that day.
Trade-in of gold jewellery
The jeweler can charge GST on the difference between the value of the new gold jewellery and the old gold jewellery.
For goods hand-carried out of Singapore via Changi International Airport the jeweler can zero-rate its supply of the goods if it maintains all the documents required under the Hand-Carried Exports Scheme.
The following documents are required to be maintained;
- sales invoice to overseas customer;
- evidence of payment received from overseas customer;
- a confirmation of receipt of goods by overseas customer;
- a “Declaration of Carrier for Goods Hand-carried out of Singapore” form7 fully completed and endorsed by both the carrier and the jeweller, showing the date of collection of goods and the name and passport number of each carrier;
- copy of transport documents such as confirmed air / ferry ticket and boarding pass bearing the carrier’s name as the passenger. A copy of airline excess baggage receipt (if applicable) for goods exported as accompanied baggage;
- extract of the carrier’s passport containing the personal details and photograph of the carrier and the relevant immigration endorsement of his exit from Singapore / entry to a foreign country;
- for export via land, an export permit showing the jeweller as the exporter and the vehicle number;
- endorsed export permit for temporary export of goods, if applicable.
Gold payment to overseas supplier
When a jeweler imports gold jewellery from his overseas supplier, he has to pay import GST to the Singapore Customs at the point of importation. There may be situations where the overseas supplier allows payment to be made in the form of gold (i.e. gold bars or scrap gold). The overseas supplier or the jeweler may hand-carry the gold bars or scrap gold out of Singapore. 4.2.2 For GST reporting purposes, the gold jeweler has to report the value of the gold hand-carried out of Singapore as zero-rated supplies in Box 2 “Total Value of Zero-rated Supplies” of the GST return and maintain the export documents as mentioned above.
Refining of gold
Some jewellers may send scrap gold to overseas refinery and in return they are paid the value of the refined gold. This is usually done through an intermediary in Singapore .For scrap gold sent to overseas refinery through an intermediary, the jeweller should charge GST on the local delivery of the gold if the ownership of the gold is transferred to the intermediary in Singapore. If not, the jeweller should declare the value of the gold exported as zero-rated supplies. The following are the events that take place in this scenario;
- Gold jeweller delivers scrap gold to a local intermediary;
- The local intermediary exports scrap gold to an overseas refinery;
- The overseas refinery refines the scrap gold to ascertain the weight and fineness of the gold;
- After the refining process, the overseas refinery will send a report (i.e. assay result) to the local intermediary detailing the weight and fineness of the gold; and
- Based on the report, the intermediary will pay the gold jeweller in cash or in paper gold (e.g. Loco London gold) via the jeweller’s gold account maintained with a bullion company.
The GST treatment of the Gold jewellery depends on the ownership of the gold transferred. If the ownership of the physical gold is transferred to the intermediary in Singapore, the gold jeweller should treat the local delivery as a standard rated supply and charge GST accordingly.
If the ownership of the physical gold is not transferred to the intermediary in Singapore before it is exported and the intermediary in Singapore is merely exporting the gold on behalf of the gold jeweller, the gold jeweller is treated as the exporter of the gold and should declare the value of gold exported as zero-rated supplies
Because of its high value, it is imperative that the jewellery store might hire a security company to transport the gold. The following documents need to be maintained;
- trust receipt issued by the security transport company with the following details:
- name and signature of the gold jeweller’s employee who handed over the gold to the security transport company;
- name and signature of the security transport company’s employee who received the gold;
- serial number of seal tag used to seal bag containing the gold;
- written instructions from the local intermediary to the freight forwarder to collect the gold (with description and weight of gold) from the security transport company and deliver to the overseas refinery; and
- air waybill reflecting the serial number of seal tag used to seal the gold, weight，description of the gold and etc. If the local intermediary consolidates shipment of gold from various customers, zero-rating can be based on the subsidiary export certificate issued by the freight forwarder instead. The local intermediary is allowed to endorse the name and address of the exporter (i.e. local customer) on the subsidiary certificate. The details to be contained in the subsidiary export certificate issued by the freight forwarder are as follows:
- the freight forwarders name, address and GST registration number, with the signature and designation of the person who issues it;
- the details of the goods received from the security transport company’s officer such as the seal number, description and weight of gold etc;
- the words “FOR EXPORT ONLY”;
- Details of flight such as flight number, date of departure and the master air waybill number.
- After the refining process, the Singapore intermediary may pay the gold jeweler in paper gold via the jeweller’s gold account. the gold jeweler is allowed to withdraw physical gold bars from the gold account. In this case, there is a separate supply of gold made by the bullion company to the gold jeweler, which is subject to GST if the gold is delivered locally.
Deposits from Customers
When the deposit forms part payment for the gold jewellery, GST has to be accounted for on the deposit at the time it is received.
Advantages of the GST-Jeweler
- The process of getting registered for GST Singapore and later on involving in GST filing with the Singapore Tax Authority IRAS (Inland Revenue Authority of Singapore), gives a positive indication to your customers that you are an established entity.
- Registration for GST only occurs when the company reaches a certain size threshold, so registering for the same will ensure that your company has certain size.
- Your cost of conducting business is reduced as the end-user is the ultimate taxpayer
- GST is levied only on consumption and not on your savings and investment
- GST is viewed as a fair tax system i.e. taxes are only paid when people spend their money
- GST ensures that the government keeps getting a stable inflow of revenue
- Collecting GST is relatively simple, which makes it an efficient tax system
Reach GST Software helps to understand the GST concept, registration procedure, filing returns and paying of taxes.
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