- The IRAS said that the e-Tax is still a draft and the Ministry of Finance will hold a public consultation.
- The reaction from the crypto community was overwhelmingly positive as expected.
Singapore government's taxation agency has proposed to end GST (goods and services tax) taxation on crypto transactions that function or aim to work as a medium of exchange. An e-Tax draft guide was published by The Inland Revenue Authority of Singapore (IRAS) regarding the treatment on what it refers to as "Digital Payment Tokens," proposing an end to GST liabilities for any entity dealing with such digital assets.
If this draft guide successfully passes the legislation, then the following changes will be in action to "better reflect the characteristics of digital payment tokens.
- "The use of digital payment tokens as payment for goods or services will not give rise to a supply of those tokens;
- The exchange of digital payment tokens for fiat currency or other digital payment tokens will be exempt from GST."
The IRAS said that the e-Tax is still a draft and the Ministry of Finance will hold a public consultation (from now until July 26) regarding the "legislative amendments for digital payment tokens." According to them, these digital payment tokens are "Bitcoin, Ethereum, Litecoin, Dash, Monero, Ripple, and Zcash." However, they specified that stablecoins might not be qualified to be exempted from GST imposition.
In the current situation and framework, the supply of digital payment tokens is still seen as taxable services. The IRAS added:
"Therefore, the sale, issue, or transfer of such tokens for consideration by a GST-registered business is subject to GST. When the tokens are used as payment for the purchase of goods or services, a barter trade resulting in two separate supplies arises — a taxable supply of the tokens and a supply of the goods or services."
Reactions from Crypto Community
Binance CEO CZ:
"#Singapore leading the way in Asia. Big financial hub of tomorrow."
Su Zhu from Uncommon Core:
"Wow, Singapore's tax authority IRAS proposes to exempt all usage of cryptocurrency as medium of exchange (MoE) from goods and services tax (GST)!"
The Crypto Lark:
"This is awesome! Well done Singapore!"
"Hail to Singapore."
"More good news coming out of Singapore, IRAS planning to remove GST (sales tax/VAT) from the payment token side (bitcoin, ether, etc) of transactions. (it was potentially double taxed before)."
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