PLAYERS in the precious metals industry are in talks with the government for an exemption of the Goods and Services Tax (GST) on the importation and local supply of precious metals for investment purposes.
They believe that the imposition of the GST on investment precious metals (IPM) will affect investors’ demand for the commodity and undermine Malaysia’s aims to be the hub for the trading of precious metals such as gold.
Local trader Public Gold Group’s founder and executive chairman Datuk Louis Ng said if GST were to be imposed on IPM, it will no longer be a viable tool for investment and as a hedge against inflation and foreign exchange fluctuations.
“By exempting the GST for IPM like most other countries, more money would flow into the country and this will attract investors,” he said.
Ng said IPM in Singapore, Thailand, Indonesia, Hong Kong and New Zealand are exempted from the GST.
Come April next year, the Sales and Service Tax (a combined 16 per cent) will be replaced by a six per cent GST, which is also known as value-added tax.
Currently, there is no tax on IPM and prices are based on international IPM prices.
Speaking to Business Times recently, Ng said industry players are currently talking to the relevant ministers regarding GST exemption on IPM.
He said IPM is a personal wealth-saving instrument for capital appreciation and is not a general consumer item.
Unlike jewelleries, IPM are non-fashionable items, do not have workmanship cost and follow international gold market price, Ng said.
“It also has exact weight and quality, which is certified by independent assayers.
“Investment in precious metals like grade gold, silver and platinum are essentially financial assets that are actively traded, similar to financial instruments such as stocks, bonds and currency,” he said.
Ng said GST exemption on IPM would encourage more Malaysians to trade in precious metals, thus enhancing national wealth.
“People will be able to trade physical gold bullion more freely and with minimal restrictions from the government.
Ng pointed out that everybody recognises the value of gold but not all look at it as a precious commodity or as an alternative investment to stocks, properties, fixed deposits, or even unit trusts.
Gold, he said, offers more liquidity and unlike property investment, does not involve a large sum of money or having to go through legal processes and filling in various forms.
“At Public Gold, we practise a transparent business model whereby we solely buy and sell physical gold and silver bars without deceiving our customers with unrealistic offers,” he said.
According to Ng, precious metals in the form of a bar, ingot, wafer or coin that meet the following criteria should be exempted from GST: gold of at least 99.5 per cent purity, silver of at least 99.9 per cent purity or platinum of at least 99.5 per cent purity.
KUALA LUMPUR