The Inland Revenue Authority of Singapore, the country’s taxation agency, has recently issued an e-Tax guide on “Digital Payment Tokens” on the 5th of July 2019 that is a proposal to bring an end to the ‘double taxation’ of transactions paid for by cryptocurrencies, from the beginning of next year.
” From 1 Jan 2020, to better reflect the characteristics of digital payment tokens, the following changes will take effect:
(i) The use of digital payment tokens as payment for goods or services will not give rise to a supply of those tokens; and
(ii) The exchange of digital payment tokens for fiat currency or other digital payment tokens will be exempt from GST*. “
Interestingly, this would enable merchants and customers to buy and sell through any cryptocurrency that is not a stablecoin, as in the IRAS’s definition they state tax-exempt cryptocurrenices as those that are “not pegged by it’s issuer to any currency”.
” A digital payment token is a digital token that has the following characteristics:
(a) it is expressed as a unit;
(b) it is fungible;
(c) it is not denominated in any currency, and is not pegged by its issuer to any currency; and
(d) it is, or is intended to be, a medium of exchange accepted by the public, without any substantial restrictions on its uses as consideration. “
In fact, the government went even further to clarify, that “Examples of digital payment tokens are Bitcoin, Ethereum, Litecoin, Dash, Monero, Ripple and Zcash,” and that “a digital token pegged to US dollars will not qualify as a digital payment token.”
This latest piece of legislation by the monetary authorities in Singapore once again proves what fertile and welcoming ground the island-nation is for innovation and emerging technology.
*GST is the ‘Goods and Services Tax’