Singapore’s government tax authorities are proposing to remove its Goods and Services Tax (GST) from cryptocurrency transactions.
The Singapore Revenue Office (IRAS) has published an e-Tax electronic guide, called “Digital Payment Tokens,” which is a draft document that highlights the details of tax collection in transactions involving cryptocurrencies or in IRAS’ terms, ‘digital payment tokens’.
If the draft manual passes the law, it will come into effect from 1 January 2020 onwards. The following clauses have been highlighted:
(1) The use of digital tokens for payment of goods and services will not increase the supply of tokens.
(2) The exchange of tokens for payment in Fiat or tokens for other payments will be exempted from goods and services taxes.
Some digital payment tokens identified in the paper include but are not limited to: Bitcoin, Ethereum, Litecoin, Dash, Monero, Ripple and Zcash. Stablecoins pegged to a national fiat currency, however, will not receive the tax exemption, according to the document.
Any tokens tied to fiat currencies will not be considered a digital token for payment, for example Tether (USDT), which is backed by USD.
IRAS said that efforts to exempt GST from cryptocurrency reflects Singapore’s response to create a more conducive environment for crypto and blockchain related businesses to grow in the country.