August 2012 Silver Bullion Newsletter - GST Amendment Alert

Dear Subscriber,

The ministry of Finance (MOF) here in Singapore is currently determining which type of bullion will be tax free. In broad terms we have three basic qualifying criteria and a list of coins:

1. Purity of silver, gold, and platinum should be 99.9%, 99.5% and 99% respectively
2. The price is determined by a price derived from the spot price of its respective metal
3. The item should have investment characteristics and be traded on the international bullion market
4. Furthermore coins are limited to a list of popular bullion coins

1. The American Eagle was dropped entirely from the tax free list because the Gold Eagle Coin, being 91% gold, does not fulfill the 99.5% purity criteria. Unfortunately the American Silver Eagle was also dropped although it is has a 99.9% purity and does fulfill the purity criteria. This coin is the most popular silver bullion coin with the US Mint having sold over 282 million coins.





 
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4. An amendment was added (see page 11 of the Goods and Services Tax (Amendment) Bill) that limits the tax free exception to LBMA accredited refiner bars. Such a clause would mean that many worldwide popular bullion bars and ingots would not be tax free in Singapore as only bars with logos from the following refiners would qualify:
   • See List of Silver LBMA members
   • See List of Gold LBMA members
   
   This amendment would complicate the import of bullion bars as both importers, travelers and custom agents would have to know which bars are, or have been, on the latest LBMA member list.

This is a unique opportunity to submit your feedback to the Ministry of Finance and secure tax free status of American Silver Eagle coins and possibly non-LBMA Silver and Gold bars in Singapore. The Singapore government is responsive to well-worded and reasoned feedback and with your help we have a good chance to change this amendment bill and alter some of proposed limitations with regard to tax free bullion.

Regarding "PART II EXEMPT IMPORTS" 
We have seen that the latest version of the Proposed GST legislation does not include either the Gold or Silver American Eagle Coins. We understand that the Gold version of this coin does not fulfill the 99.5% purity requirement being 91.6% pure. 

However the American Silver Eagle is 99.9% pure which matches the required 99.9% purity requirement for Silver. Furthermore the American Silver Eagle coin is by far the most popular and liquid Silver Bullion coin worldwide by a large margin. Over 282 million bullion coins have been produced - seehttps://en.wikipedia.org/wiki/American_Silver_Eagle - and many Singaporeans and foreign nationals have invested in this coin and wish to continue to do so in the future. 

We request that the 99.9% Silver America Eagle Coin be added to the list of tax exempted coins.

However in the retail bullion market there are large and established non-LBMA foundries such as “Sunshine Mint” which is among the most important high-quality bullion suppliers for many bullion brands – including some LBMA member labels - around the world and the primary supplier of silver blanks to the United States Mint.

It would be a disappointment if Singapore were to cut off many of the most popular bullion retail products (worldwide) due to LBMA membership requirements when quality can be guaranteed by other technical certifications such as ISO production standards. Such LBMA membership restrictions would also be a complicating factor for Singapore custom officers who would need to keep track of the latest LBMA member lists and would definitely confuse private citizens and visitors who intend to import bullion to Singapore.

Just as importantly many retail bullion innovations are originating from non-LBMA foundries such as embedded chips / chemicals that can be used to authenticate bars using a simple scanner and potentially even a smartphone. By limiting competition from these innovative companies Singapore will delay or prevent these technologies from reaching Singapore shores.

As Singapore is striving towards becoming a major bullion trading hub there should be a simple "yes" answer when a customer asks whether he can import his investment grade silver or gold bullion tax free. However the current LBMA amendment makes for a very complicated answer which would likely scare many customers.

We believe that Gold and Silver Bullion taxation should be determined independently of LBMA memberships based on the original bill proposal. The proposed LBMA member restriction on bullion bars should be removed.

1. Go to http://app.mof.gov.sg/pc_gst_2012.aspx for Information on the "Goods and Services Tax (Amendment) Bill"
2. Go to http://app.mof.gov.sg/ONResponseTemplate1.aspx?frm_sid=20120706243418929454 to submit your feedback
3. Submit your feedback and eventual supporting evidence;

• Gold American Eagles - These will most likely not be tax free due to the purity requirement. Notice that the .999 Gold Buffalos will, however, be tax free. 
   
• Silver American Eagles - We believe that there is a reasonable chance that these will be tax free if enough quality feedback is submitted. Should silver Eagles not become tax free and you have Eagles under S.T.A.R. storage which you want to take delivery of after 1 October in Singapore we will offer you the option to exchange your S.T.A.R parcel for tax free Maple Leafs, Libertads or Vienna Philarmnics coins. 
• -- Update September 20-- American Silver Eagles are Tax Exempt, partly thanks to your feedback !  --
   
• 10 oz A-Mark Bars - It is our understanding that these are produced by Sunshine Mint which is currently not an LBMA member. Should A-Mark bars not become tax free and you own A-Mark bar mini parcels under S.T.A.R. storage which you want to take delivery of after 1 October in Singapore we will offer you the option to exchange your 100 oz S.T.A.R parcel for one 100 oz Johnson Matthey bars (LBMA member) or other tax free 10 oz bars. 
   
• Credit Suisse Gold bars - Should Credit Suisse Gold bars not become tax free and you have 10 oz Credit Suisse Gold bars under S.T.A.R. storage which you want to take delivery of after 1 October in Singapore we will offer you the option to exchange your S.T.A.R parcel for 10 oz Johnson Matthey gold bars (LBMA member) or other tax free 10 oz bars.
• -- Update July25 -- Credit Suisse Bars will be Tax exempt due to the Essayeur Fondeur Mark on Bar is an LBMA member --

Please note that if you own bullion which will not be tax exempt outside of S.T.A.R. Storage this law will make little difference as the GST paid in the past is not recoverable by you. However we would expect new imports of non-tax exempt bullion products to dwindle to almost nothing as a 7% tax is too large a tax for bullion. 

For new S.T.A.R. purchases we would recommend Johnson Matthey bars and Maple Leaf coins over A-mark bars and American Eagle coins until there is more clarity on the final version of this law. 

As part of our relocation to level 3 - meters from the Certis Cisco safe deposit boxes - we have extended our opening hours to: 

   10:00 am to 7:00 pm on Monday to Friday 
   10:00 am to 2:00 pm on Saturdays 

For new subscribers outside of Singapore you might be interested to know that Certis CISCO Security Private Limited has it’s roots as a department of the Singapore Police Force and is Singapore’s largest Auxiliary Police force with over 3000 officers who are vested with all the power, protection and immunities of a Police Officer of corresponding rank.

Beside it's policing functions CISCO is also the largest provider of Safe Deposit Boxes in Singapore and handles armed transports & storage for both the Singapore government and the vast majority of Singapore Banks.

As such Certis Cisco is a perfect place to store bullion and from 1 October you will be able to do so yourself tax free for most bullion* (see GST Bill section)

You might have heard that Italy has implemented a 1,000 euro (1,600 SGD) cash withdrawal limit for bank account holders. My understanding is that the limit is reset every 10 days so you are allowed to withdraw about 100 euro per day from your account. 

I thought to try it out myself in Italy and check whether my Singapore issued Citibank card would be affected. However, upon arrival my 1,000 euro withdrawal right was immediately claimed by my father who needed my help - my "withdrawal ration"- to withdraw an extra 1,000 euro fromhis account using my Italian Tax ID (I still have one). It is not a joke, these capital controls are real and are making "paper cash" more valuable than it's bank balance equivalent.

However according to the bank teller it was legal to withdraw more than 1,000 euro. But since people are prohibited from spending more than 1,000 euro in cash it made sense for the bank to "help" them by limiting withdrawals. 

It is clear that Italian bank tellers are having a very hard time implementing these capital controls and try to spin it as best they can, but the bottom line is that customers cannot access most of their cash. Unfortunately employment chances in Italy are very bad and few tellers would consider quitting as finding employment is a bit like winning the lottery these days. 

This cash rationing is in place to prevent unreported work and curb the rampant tax evasion in Italy. However with sky high taxes, absurd labor laws and an ailing economy very few jobs are likely to be created. 

I am sure that sooner or later Italy will experience a prolonged bank holiday and that upon reopening most accounts will suddenly be denominated in Italian Lira again. Berlusconi is already advocating this as the cure of all ills, as it is much easier to print money rather than collect it. 

As I left Italy the situation was best summed up by commentary from a local radio host: "This is so depressing, compared to our financial situation the Euro Final was a delight" (Italy lost 4-0 to Spain in the Euro Cup) "but at least we beat the Germans".

See more products and prices at www.SilverBullion.com.sg 

Best Regards 

The Silver Bullion Team 

Silver Bullion Pte Ltd 
GST Registration Nr: 200907537M 
Floor #03-02A Certis CISCO Center II 
20 Jalan Afifi, Singapore 409179 
Singapore 

Phone: (65) 6100-3040
Fax: (65) 6826-4022 
Email: [email protected]

Information provided here should not be considered as advice or as an offer or enticement to buy, sell or trade. The contents of this publication, including any opinions and analysis, are strictly intended for educational use. Opinions expressed in bylined articles are those of the individual author and do not necessarily reflect the views of Silver Bullion Pte Ltd. 

Silver Bullion Pte Ltd. makes no warranties, whether expressed or implied, as to the accuracy of the information provided or for eventual results obtained by using the information. In no case shall Silver Bullion Pte Ltd. be liable for direct, indirect, or incidental damages resulting from the use of the information. 

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