While gold continues to captivate, the details of GST can be challenging for jewellers. This article intends to simplify the GST rules related to gold jewellery, helping Singaporean jewellers navigate through the tax regulations more comfortably.
Special Time of Supply Rule for Gold:
Unlike other goods, gold has a special time of supply rule.
Typically, GST is accounted for when an invoice is issued or when payment is received, whichever occurs first. However, in the case of gold, jewellers have up to 90 days from the date of delivery to issue a tax invoice and account for GST, provided the price hasn’t been fixed and payment hasn’t been received at the time of delivery.
Illustrative Example:
Consider a scenario where gold jewellery is delivered on 1 Feb 2023, but the price isn’t fixed and payment is still outstanding by the 90th day, i.e., 2 May 2023.
On this day, with the open market value (OMV) of gold standing at $1,000, a tax invoice must be issued accounting for GST of $80.
Subsequently, on 1 Jul 2023, when the price is fixed at $1,200, another tax invoice should be issued to account for the additional GST of $16 due to the price difference of $200 ($1,200 – $1,000).
GST on Deposits:
When a deposit forms part payment for gold jewellery, GST needs to be accounted for on the deposit amount at the time it’s received.
Trade-ins:
In trade-in transactions, GST is only charged on the difference in value between the old and new gold jewellery.
For instance, if the old piece is valued at $1,200 and the new one at $1,500 (inclusive of a $30 workmanship fee), GST is charged on the $300 difference, amounting to $24.
Not All Gold is Taxed Equally:
It’s important to note the distinction between Investment Precious Metals (IPMs) and gold jewellery. While IPMs are exempt from GST, gold jewellery remains taxable at a rate of 7%.
Recent GST Amendments:
The GST landscape underwent a change with the introduction of a new GST law from 1st January 2022, which included introducing GST on imported goods valued at SGD 400 or more.
While the focus here is on imported goods, it’s advisable to stay abreast with the latest tax amendments to ensure compliance.
Overseas Sales:
For international sales, the Hand-Carried Export Scheme (HCES) allows for zero-rating the supply to overseas customers, provided the gold is hand-carried out of Singapore via Changi International Airport and requisite documentation under HCES is maintained.
The guidelines surrounding GST on gold jewellery may seem complex at first glance, but a deeper understanding can help Singaporean jewellers navigate them proficiently.
For more comprehensive information and guidance, jewellers are encouraged to visit IRAS’s dedicated webpage on GST in the gold jewellery sector. This resource is instrumental in ensuring compliance with the GST regulations, fostering a transparent and thriving gold jewellery market in Singapore.
