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For GST-registered businesses

The provision of financial services and the sale and lease of residential properties are exempt from GST. With effect from 1 Oct 2012, the importation and local supply of investment precious metals (IPM) will also be exempt from GST. No GST needs to be charged or paid for exempt supplies.

On this page:
Financial services
Sale and lease of residential properties
Budget 2012 – Exemption of investment gold, silver and platinum 
Can I claim GST incurred in the making of exempt supplies?
Reporting your exempt supplies

Financial services

The Fourth Schedule to the GST Act provides the list of financial services that are exempted from GST. Examples of these financial services include:

  • Provision of loans;
  • Issue / sale of shares or bonds;
  • Provision of life policy by an insurance company;
  • Charges by banks for the operation of bank accounts;
  • Exchange of currency;
  • Provision of futures or forward contracts.

For more information and the full list of exempted financial services, please refer to the list of financial services (170KB).

Provision of financial services by non-financial institutions

The provision of financial services is not confined to financial institutions. The following are common types of financial services provided:

  1. Deposit of money in a bank


    This is considered as a loan provided by the businesses to the bank (i.e. provision of financial service). The interest income received from the bank should be reported as your exempt supplies in Box 3 of the GST return.

  2. Exchange gain/loss arising from transacting in foreign currencies

    You may sell goods to your customers and invoice them in a foreign currency (e.g. US dollars). When your customers make payment in foreign currency and you exchange the foreign currency for Singapore Dollars, exchange gains or losses may arise. You should report the absolute value (i.e. drop negative sign, if any) of net realised exchange gain/loss for each prescribed accounting period as your exempt supply in Box 3 of your GST return.

    Example:

    Your prescribed accounting period is from Oct to Dec 2009.

      Realised exchange gain/(loss)
    Oct 2009 ($150)
    Nov 2009  $100
    Dec 2009  ($200)

    Net realised foreign exchange loss for the period = ($250)
    Absolute value of net realised foreign exchange loss for the period = $250

    In addition, you received $400 interest from fixed deposit in December 2009.

    Total value of exempt supplies (Box 3) = $250 + $400 = $650

Fees from arranging or advising on financial transactions

The advising on, arranging, broking, or underwriting of financial activities is not exempted from GST. Such fees are subject to GST when the services are provided to local customers. These fees may be zero-rated when they are provided to overseas customers.

Example:

You are an insurance broker who receives a commission from an insurance company for arranging a life policy for a local policyholder. You need to charge GST at 7% for this service that you provide to the insurance company. This is so even though the premium of the life policy is exempted from GST.

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Sale and Lease of residential properties

The sale and lease of residential properties are exempted from GST.

Residential properties refer to:

  • A vacant land that is zoned "Residential" or "Rural Centre and Settlement" in the Master Plan which will be used for residential development; or
  • Residential dwellings (e.g.  flats, semi-detached houses) and properties which provide medium to long term accommodation as alternatives to residential dwellings (e.g. serviced apartments)

Sale of furnished residential properties

You need to charge GST on the supply of movable furniture and fittings. However, fixtures such as built-in cabinets and wardrobes, kitchen and sanitary wares, wall-mounted air conditioners that are attached permanently to the residential property can be exempted from GST together with the property. Please refer to FAQs for information on how to account GST on the sale and lease of furniture and fittings.

Fees from services relating to sale/ lease of residential properties transactions

Exemption from GST is not extended to the arranging, broking or advisory services relating to the sale/ lease of residential properties. Such fees are subject to GST.

Example:

You are a real estate/property agent and provides services either in your individual capacity (as a GST registered person) or as an employee of a GST-registered real estate agency. In both instances, the services provided are taxable supplies.  This is regardless of whether the properties are residential or commercial in nature.
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Budget 2012 – Exemption of investment gold, silver and platinum

Investment gold, silver and platinum (“precious metals”) are essentially financial assets that are actively traded, similar to financial instruments such as stocks and bonds that are currently exempt from GST. To facilitate the development of a new gold refining and trading cluster in Singapore, the import and supply of investment precious metals (IPM) will be exempt from GST as announced in Budget 2012.

Concurrently, the new Approved Refiner and Consolidator Scheme (ARCS) will be introduced to ease cash flow and compliance of qualifying refiners and consolidators in their payment of GST on import and purchase of materials used in refining the precious metals into investment form. For more information, you may refer to GST: Approved Refiner and Consolidator Scheme (ARCS) (484KB).

Definition of investment precious metals (IPM)

The importation and local supply of IPM are exempt from GST with effect from 1 Oct 2012. Precious metals in the form of a bar, ingot, wafer or coin that meet certain criteria will qualify as IPM.

Criteria for IPM bar, ingot and wafer

To qualify for GST exemption, the precious metal must meet all of the following criteria:

  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:
    • For gold and silver, a refiner in the current or former ‘Good Delivery’ list of the London Bullion Market Association (LBMA) (please refer to LBMA’s website for its ‘Good Delivery’ list of gold and silver refiners );
    • For platinum, a refiner in the current or former ‘Good Delivery’ list of the London Platinum & Palladium Market (LPPM) (please refer to LPPM’s website for its ‘Good Delivery’ list of platinum refiners ); or
    • A refiner who intends to be in the ‘Good Delivery’ List of the LBMA (for gold and silver) or LPPM (for platinum) and is endorsed by the International Enterprise (IE) Singapore. Refiners with such endorsement are published below.
  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.
  4. It trades at a price based on the spot price of the metal it contains.

A precious metal bar, ingot or wafer that fails any of the above criteria cannot qualify as an IPM (hereinafter referred to as ‘non-IPM’). The importation and supply of such non-IPM continue to be taxable. Examples of non-IPM are jewellery, scrap precious metals for refining and precious metals refined by refiners that are not on the ‘Good Delivery’ list of LBMA/ LPPM or not endorsed by IE Singapore.

Criteria for IPM coin

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.

To provide certainty, coins that can qualify as IPM are prescribed. For the full list of coins which qualify as IPM, please refer to GST: Guide on Exemption of Investment Precious Metals (IPM) (224KB).

Coins that are not in the prescribed list cannot qualify as IPM. The importation and supply of such non-IPM coins will continue to be taxable. Examples of non-IPM coins are proof and numismatic coins that are usually traded at prices largely determined by their rarity, finishing and beauty.

Supply of Investment Precious Metals

A local sale of IPM (i.e. a supply of IPM where the IPM is delivered in Singapore) made on or after 1 Oct 2012 is an exempt supply.

A supply of IPM which is exported from Singapore continues to be zero-rated. You are required to maintain the relevant documentation to support that the IPM has been exported. Please refer to GST: A Guide on Exports (556KB) for the list of documents to maintain.

A supply of IPM that is located outside Singapore continues to be an out-of-scope supply and is not subject to GST.

Invoicing requirements for an exempt supply of IPM

To provide clarity to the customers and to differentiate exempt supplies of IPM from taxable supplies of non-IPM, you are required to issue an invoice which contains all the following information for an exempt supply of IPM:

  1. An identifying number
  2. Date of issue of the invoice
  3. Name, address and registration number of the supplier
  4. Name and address of the customer
  5. A description of the IPM supplied –

    For IPM bar, ingot or wafer
    • Type of precious metal (gold, silver or platinum)
    • Weight
    • Purity
    • Name of refiner (e.g. Metalor Technologies SA)
    • Unique serial number (where applicable)

     

    For IPM coin
    • Type of precious metal (gold, silver or platinum)
    • Name of coin (e.g. Canada Maple Leaf Coin)
    • Country of origin

     

  6. Quantity of IPM supplied
  7. Total amount payable

The invoice should be issued within 30 days of the supply of the IPM. You are required to maintain the invoice to support the exempt supply made.

List of refiners endorsed by IE Singapore

Refiners that are currently endorsed by IE Singapore are published below.

 S/No.

Entity ID   Name of Endorsed Refiner Effective Date of Endorsement   Period of Endorsement End Date of Endorsement 

Remarks 

1

200101382E

Metalor Technologies Singapore Pte Ltd

07/05/2013

5 years

06/05/2018

 

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Can I claim GST incurred in the making of exempt supplies?

When you make both taxable and exempt supplies, you are required to apply the De Minimis Rule to determine the amount of input tax you can claim.

If you satisfy the De Minimis Rule, you may treat all your input tax as if they are incurred for the making of taxable supplies and claim the input tax in full. If the De Minimis rule is not satisfied, you can only recover the input tax that is attributable to your taxable supplies. Find out more on how to apply the De Minimis Rule.

Reporting your exempt supplies

Exempt supplies have to be reported in Box 3 (Total value of exempt supplies) of your GST return. Find out more on value of exempt supplies to be reported in How Do I Prepare My GST Return (1.31MB).

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FAQs

 

Q1. What is the difference between standard-rated supplies, zero-rated supplies and exempt supplies?

 

Like standard-rated supplies, supplies that are zero-rated are part of the taxable supplies. The only difference is that GST of 0% is applicable to zero-rated supplies, while GST of 7% is applicable to standard-rated supplies.  Like standard-rates supplies, input tax incurred in the making of zero-rated supplies is claimable.

GST is not chargeable on exempt supplies. Input tax incurred in the making of exempt supplies is not claimable. This is unlike input tax incurred for making zero-rated and standard-rated supplies which is claimable.


 

Q2. I am unable to track which gains or losses arising from foreign currency or derivative transactions are realised or unrealised. Can I report the total realised and unrealised gains or losses as my exempt supplies?

 

If it is administratively cumbersome for you to separately track, we are prepared to allow you to report total value of realised and unrealised gains or losses. This is subject to the following conditions:

a) Your accounting practices conform to proper accounting and reporting standards.
b) You adopt same basis of reporting value of exempt supplies from foreign currency and derivative transactions consistently.

However, you should also be aware that reporting unrealised gain or losses may affect your input tax claims when applying the De Minimis Rule. Thus, you are advised to weigh the reduction in tracking efforts against the impact on input tax claims.


 

Q3. Can I apply for GST Registration if I only provide financial services to overseas customers?

 

Yes. If you provide financial services to overseas persons, the financial services will qualify for zero-rating as international services. You may apply for GST registration voluntarily. The approval of the application is at the discretion of the Comptroller.


 

Q4. Is the interest income received from overseas companies an exempt supply?

 

Generally, interest income received is an exempt supply under Part I of the Fourth Schedule to the GST Act.

However, financial services that can qualify as international services under section 21(3) of the GST Act will be treated as zero-rated supplies instead of exempt supplies e.g. interest income from overseas bank.


 

Q5. If I have a shop-house, how do I account for GST on its rental?

 

If the shop-house is approved for both residential and commercial uses, you need to apportion the rental accordingly. The rental attributable to the residential portion is an exempt supply. No GST needs to be charged. The rental attributable to the non-residential portion will attract GST.


 

Q6. Do I have to account for GST on the lease of a furnished residential property?

 

The rental of the bare residential unit is exempt from GST. However, you need to charge GST on the rental of the furniture and fittings.

To compute the rental value of the bare residential unit, the annual value (as shown in the Valuation List and Valuation Notice) of the property should be used. The monthly rental value of the bare unit shall be taken as 1/12 of the annual value of the property.

The monthly rental value of the furniture and fittings will be the difference between the monthly gross rent (i.e. the total rental which you charged your tenant) and 1/12 of the annual value of the property. If the actual gross rental is lower than 1/12 of the annual value of the property, you do not need to charge GST on the rental of furniture and fittings.

A numeric example:

Total rental of the furnished flat = $4,500 per month

Annual value in the Valuation List = $36,000
Value of exempt supply (per month) = 1/12 x $36,000 = $3,000 per month
Value of supply of furniture and fittings (per month) = $4,500 - $3,000 = $1,500 per month

You will have to charge GST on $1,500. This is the rental value of your furniture and fittings for the purpose of GST charging. This is regardless of whether a different amount for rental of furniture and fittings was stated in your tenancy contract.

Alternatively, if you wish to treat the rental as inclusive of GST, you can account for the GST based on the tax fraction of 7/107 of $1,500.


 

Q7. Do I have to account for GST on the sale of a furnished residential property?

 

The sale of the bare residential property is not subject to GST as it is an exempt supply. However, you need to charge GST on the supply of any movable furniture and fittings.

Therefore, you need to apportion the selling price of your furnished residential property into:

1) Value of furniture and fittings based on  its open market value or cost (subject to GST)
2) Value of the bare property (not subject to GST)


 

Q8. I am in the business of selling goods. I deposit money in the bank to earn interest. Since I am not a financial institution, do I need to report the interest received?

 

Although you are not a financial institution, your deposit of money in a bank is a provision of financial service. Hence, you are required to report the interest received as your exempt supply.


 

Q9. My company provided a loan of $100,000 and charged 2% interest to an overseas company. There is no local person directly benefitting from this loan. Do I report the $2,000 interest received as my exempt supply or zero-rated supply?

 

Your provision of loan is a provision of financial service. However, since it qualifies as an international service, you may report the interest received as your zero-rated supply instead.

However, if your company had provided the loan to a local company, you should report the interest received as your exempt supply.


 

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Last Updated on 10 December 2014


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