SINGAPORE'S government has announced Gold Trading activities will be exempt from a 7% goods and services tax with effect from October. The move could see an upturn in Gold Bullion refiners and storage firms choosing to locate in Singapore, and is also expected to boost Gold Trading activity.
"I think this is really going to change the landscape in Singapore," one gold trader tells newswire Reuters.
"A lot of companies will find the incentive to start operations in Singapore...this is [also] going to draw attention to Singapore as a safe place to park funds."
JPMorgan Chase & Co., a financial institution that is heavily active in Gold Trading worldwide, opened a precious metals vault in Singapore in 2010.
Some analysts have suggested the move makes sense since Gold Trading does not represent a traditional sale of goods and services.
"It seems a little unfair to put a sales tax on what is essentially money," says Nick Trevethan, Singapore-based senior commodity strategist at ANZ Bank.
Making Gold Trading exempt from the goods and services tax "will allow Singapore to better compete with Hong Kong and other bullion trading centers in the region," he adds.
Singapore's move comes as exchanges in China look to boost their Gold Trading activity. Last week, the Shanghai Futures Exchange announced it will cut its margin on Gold Futures contracts with effect from March 1. Rival platform the Shanghai Gold Exchange announced this week that it is cutting its Gold Trading fees.
The SGE is also reported to be planning to launch over-the-counter Gold Trading, which would allow much larger volumes of gold to be traded. The SGE is said to be in talks with the China Foreign Exchange Trade System, an arm of the central bank that deals with interbank settlements, over the plans. There are also reports that the SGE plans to launch a Gold ETF.
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