Singapore tax authorities propose to remove cryptocurrency transactions from GST taxation

Singapore tax authorities propose to remove cryptocurrency transactions from GST taxation

Translator: Play the coin family ElaineHu

The Singapore government tax agency proposes to remove cryptocurrency transactions from the Goods and Services Tax (GST) taxation on the grounds that they function or target as a medium of exchange.

Last Friday, the Singapore Revenue Agency (IRAS) issued a draft e-tax guide that provided tax guidance for what it called “digital payment tokens” in an attempt to exempt goods and services from any entity that handles such digital assets. Tax (GST) tax liability.

If the draft guide passes legislation from January 1, 2020, the following changes will take effect to “better reflect the characteristics of digital payment tokens”:

(i) the use of digital payment tokens as payment for goods or services does not result in an increase in the supply of such tokens;

(ii) Conversion between fiat currency and other digital payment tokens will not be subject to the Goods and Services Tax.

The Singapore Revenue Agency said that the “Digital Token Tax Guide” is still in the draft stage, and the Ministry of Finance will conduct public consultation on “Legislative Amendments to Digital Payments” from now on until July 26.

The draft guidelines also set detailed parameters on how to define digital payment tokens. The draft states that it should have all of the following characteristics:

a) it is expressed as a unit,

b) it is an alternative,

c) It is not denominated in any currency and the issuer is not linked to any currency.

d) it can be transferred, stored or traded digitally.

e) It is (or is intended to be) a publicly accepted exchange medium, or a part of the publicly accepted exchange medium, without any material restrictions on its use as consideration.

"Examples of digital payment tokens include Bitcoin , Ethereum , Litecoin , Dash , Monroe, Ripple and Zcash ," IRAS added in the proposal.

It is worth noting that the agency has clearly stated that cryptocurrency stabilized currencies designed to link value to fiat currencies may not qualify for GST exemption.

IRAS stated in the draft: “Digital tokens denominated in any legal currency or linked to any legal currency are not eligible to become digital payment tokens. For example, digital tokens linked to the US dollar will not be eligible for digital payment tokens. Qualification of recognition."

IRAS said that the development and growth of cryptocurrency in the world has prompted multiple jurisdictions to re-examine their positions. The agency said: "Similarly, IRAS has reviewed its GST position to keep up with these developments."

Under the current framework, the supply of digital payment tokens is still considered a taxable service offering.

“Therefore, the sale, distribution or transfer of such tokens is subject to GST. When the contemporary currency is used as a payment for the purchase of goods or services, the barter trade produces two different supplies – the taxable supply of the token and The supply of goods or services," IRAS pointed out in the draft.

In October 2017, Australian lawmakers passed a bill that ended the so-called double taxation, exempting GST from paying for cryptocurrencies.

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