The Inland Revenue Authority of Singapore (IRAS) has announced a significant change to the Goods and Services Tax (GST) administrative concession applicable to trade-in transactions within the gold jewellery industry, effective 1 January 2025.
Current Concession:
- Ordinarily, GST treats a trade-in as two distinct supplies: the sale of new goods and the purchase of used goods. The GST-registered supplier must charge GST on the full value of the new goods supplied.
- Under an existing administrative concession, gold jewellers are permitted to charge GST only on the difference (or cash top-up) between the value of the new gold jewellery supplied and the value of the old gold jewellery accepted as trade-in.
- This concession applies exclusively to gold jewellery. It explicitly does not apply to:
- Trade-ins of other goods (e.g., gold bars).
- Transactions involving scrap gold consolidation or refabrication of old gold.
- The value of any materials other than gold (e.g., diamonds, rubies, other precious/semi-precious stones, settings) incorporated into the jewellery. These materials’ value must be excluded when calculating the gold supply value for concession purposes.
Key Change Effective 1 January 2025:
- The administrative concession allowing GST to be charged only on the difference in a gold jewellery trade-in transaction will now be contingent upon the customer’s GST registration status.
- Jewellers may only apply this concession if the customer is not registered for GST at the time of the supply.
- If the customer is GST-registered, the standard GST rules apply: the jeweller must charge GST on the full value of the new gold jewellery supplied. The trade-in would be treated as a separate supply from the customer to the jeweller.
Gold jewellers must implement systems to verify the GST registration status of customers engaging in trade-in transactions from 1 January 2025 onwards. Failure to apply the correct GST treatment based on the customer’s registration status could result in compliance issues. The change aims to align the concession more closely with standard GST principles, particularly in Business-to-Business (B2B) transactions where the customer is GST-registered.
Source: IRAS, 1 April 2024