Singapore Seeks to Attract Gold Traders by Dropping Taxes on Precious Metals

The trading of gold has become so prevalent lately that countries are doing everything they can to attract investors, and Singapore is no exception. Though they are currently doing well with regards to the global view of them as a safe place for investment, they are having trouble competing with some of their neighbors. In order to remedy this, the country has decided to remove a goods and services tax (GST) on precious metals, hopefully making them look more attractive as an investment option.

The GST is currently set at 7%, though as of October 2012, it will no longer affect the sales of precious metals. This puts precious metals in the same general category as stocks and bonds with regards to trading. By treating these types of commodities as they would more standard cash, companies will be more likely to use the country when doing business. So far, the announcement has generated a retail trade increase of approximately 5 to 10 percent.

The primarily goal behind the government’s decision is remove barriers to investment and entice certain companies, such as bullion refineries and storage firms, into choosing the country as a place to relocate. Eventually, the country hopes to put themselves into the position of being a precious metals hub and international trading center. JP Morgan Chase & Co. already established a precious metals vault in 2010, and with the new policies more investors are likely to follow.

Though already seen as one of the safest places to invest, Singapore will need to act more aggressively in order to successfully compete against other powerful hubs, such as Dubai, Hong Kong and the growing influence of Shanghai. China is making moves along the same lines, offering investors incentives for using them and boosting their own trading power. The next step, according to the country’s economic experts, is to establish an organization which can develop policies which will improve their market power and win in the race to become the most influential trading hub in the Far East.

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