According to a draft published by The Inland Revenue Authority of Singapore (IRAS) on Friday 5th July, the government of Singapore is planning to end Goods and Services Tax(GST) on cryptocurrencies that function as a medium of exchange.
The draft stated that the supply of “digital payment tokens” in exchange for fiat currency or other digital payment tokens will be exempted from GST. Due to the exemption of crypto tokens from taxes, it will not add to the annual taxable turnover of the companies.
If the proposal is passed by the legislation, it will become effective from January 1, 2020. The Ministry of Finance is currently holding public consultation till July 26 on legislative amendments for digital payment tokens.
The IRAS said in the draft, “Any digital token that is denominated in any fiat currency or with a value pegged to any fiat currency will not qualify as a digital payment token.” The IRAS has defined ‘digital payment tokens’ which has these 5 key features:
- It is expressed as a unit.
- It is fungible i.e. it is freely exchangeable for or replaceable by another of like nature.
- It is not denominated in any currency and is not pegged by its issuer to any currency.
- It can be transferred, stored or traded electronically.
- It is intended to be a medium of exchange accepted by the public, without any substantial restrictions on its uses as consideration.
IRAS stated a few examples of digital payment tokens as Bitcoin (BTC), ether (ETH), litecoin (LTC), dash (DASH), monero (XMR), Zcash (ZEC) and XRP. IRAS said that the proposal to end GST liabilities on cryptocurrencies is following the trail of development and growth that has led various jurisdictions to review their stance on cryptocurrencies. “Similarly, IRAS has reviewed its GST position to keep up to date with these developments,” the agency said.
Do you think IRAS’s move to end GST taxation on cryptocurrencies in Singapore will proliferate cryptocurrency business in Singapore? Let us know in the comment section below.