This article was originally published in BDO Spotlight - January 2025
Under the normal rule, transactions involving trade-ins are treated as two separate supplies for GST purposes. For GST-registered businesses accepting trade-ins, GST must be charged on the full selling price of the goods, rather than the net difference.
The Inland Revenue Authority of Singapore (IRAS) has granted an administrative concession allowing GST-registered jewellers an option to charge GST only on the difference between the values of the new and old traded-in jewellery, regardless of whether the customer is GST-registered. This trade-in concession applies only to gold jewellery and does not extend to other goods, such as the setting of diamonds, rubies or other precious/semi-precious stones.
The current administrative concession for gold jewellery trade-ins was introduced in 1994 as part of IRAS’ recognition of the high inherent value of gold and the prevalence of trade-in arrangements within the gold jewellery industry.
With effect from 1 January 2025, the administrative concession for gold jewellery trade-ins will apply only when the customer is not registered for GST at the time of supply (i.e., the earlier of payment received or invoice issued). It is not compulsory for GST-registered retailers to adopt the administrative concession. Retailers who cannot verify the GST registration status of their customers may choose not to adopt the concession and instead apply the normal rule for trade-ins.
| Administrative concession for trade-in of gold jewellery | GST-registered customer | Non-GST registered customer |
| Before 1 January 2025 | May choose to apply the concession by accounting for GST based on the difference for the trade-in | |
| On and after 1 January 2025 | GST chargeable on the full selling price of the jewellery under the normal rule | May choose to apply the concession by accounting for GST based on the difference for the trade-in |
Considerations for Managing This Change Seamlessly
In view of the change, gold jewellers must first determine whether their customers are registered for GST before availing themselves to the administrative concession. This can be done via the GST Registered Business search function available on the IRAS website via the link:
IRAS | myTax Portal Search GST Registered Business.
It is recommended that gold jewellers include the GST registration number of their customers on the tax invoices, along with a breakdown of the full price and the trade-in value of the gold where the administrative concession is adopted. Supporting documents, such as gold payment vouchers received from the customers or gold receipt vouchers issued to the customers, detailing the value of the old gold jewellery, should be maintained to substantiate the trade-in arrangement.
References:
- Buying or selling gold jewellery? From 1 Jan 2025, changes to GST administrative concession for trade-in of gold jewellery will take effect: https://www.iras.gov.sg/who-we-are/what-we-do/annual-reports-and-publications/taxbytes-iras/gst/buying-or-selling-gold-jewellery--from-1-jan-2025--changes-to-gst-administrative-concession-for-trade-in-of-gold-jewellery-will-take-effect#:~:text=From%201%20Jan%202025%2C%20the,at%20the%20time%20of%20supply