Singapore will cancel the tax on goods and services for cryptocurrency

Singapore will cancel the tax on goods and services for cryptocurrency09.07.2019


Singapore will cancel the tax on goods and services for cryptocurrency

The Singapore Tax Agency proposes to exempt from services tax (GST) operations with cryptocurrencies, which are intended to be a medium of exchange.

The Internal Revenue Authority of Singapore (IRAS) published last week an e-tax project that included Digital Payment Tokens in order to discharge GST (analogous to VAT) for any entity dealing with such digital assets.

If the draft law is adopted by legislators, the following changes will come into force on January 1, 2020, “in order to better reflect the characteristics of digital payment tokens:

1. Using digital payment tokens as payment for goods or services will not result in the delivery of these tokens;

2. The exchange of digital payment tokens for national currency or other digital payment tokens will be exempt from GST. ”

 

IRAS stated that the e-tax is still at the project stage, and the Ministry of Finance from May 26 to July 26 will hold a public consultation on “legislative amendments for digital payment tokens”.

The draft guide also describes in detail how to define digital payment tokens. The token must have all the characteristics listed below:

1. expressed as a unit of account;

2. is interchangeable;

3. not denominated in any currency or tied to any currency;

4. it can be transferred, stored or sold electronically;

5. it must be a medium of exchange accepted by the public or part of society, without any significant restrictions on its use.

 

“Examples of digital payment tokens are BTC, ETH, LTC, DASH, XMR, XPR and ZEC,” the IRAS said in the proposal.

In particular, the agency states that the stablecoins may not be eligible for exemption from GST.

“Any digital token nominated in any fiat currency or having a value tied to any fiat currency will not be considered a digital payment token,” says the IRAS project. "For example, a digital token tied to the US dollar will not be a digital payment token."

The IRAS stated that such efforts to terminate GST cryptocurrency obligations follow the growth of their popularity in the world, which led to a revision of their status in various jurisdictions. “Similarly, the IRAS revised its position on GST to keep pace with the times,” the agency said.

In accordance with the existing concept, the delivery of digital payment tokens is still considered as a taxable supply of services.

“The sale, release or transfer of such tokens by the business paying GST is subject to taxation. When tokens are used as payment for the purchase of goods or services, barter trade arises, resulting in two separate deliveries — a taxable supply of tokens and a supply of goods or services, ”says the IRAS project.

 

In October 2017, Australian lawmakers passed legislation on the termination of the so-called double taxation, exempting from the payment of goods and services tax (GST) from purchases of cryptocurrencies.

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