08 Jul 2019 Arjun Agarwal
No VAT On Crypto Transactions In Singapore?
The Singapore government plans to eliminate the Goods and Services Tax, or GSD (the Singaporean version of the VAT) for all crypto operations, such as trading and exchanging for other goods and services tokens.
The plan is written and kept in a document, published by the Singapore’s Inland Revenue Authority (IRAS).
If the document receives a green light from the Singapore’s government, it is anticipated to come to an effect on January 1st , 2020. The new guide will overwrite the current tax laws, in which crypto transactions are taxable.
In the document, IRAS is stating that up to this point, cryptocurrencies were falling into a “barter trade” category as a means of exchanging goods and value. According to the proposal, payment tokens do not produce an upward shift in supplies, which is the main reason why they should be free of taxation under the GSD laws.
IRAS refer to some of the largest and well-known and established cryptocurrencies to date, such as Bitcoin, Ethereum, Ripple, Litecoin, Monero, Dash, and ZCash. The list excludes stablecoins because they are backed by fiat and are a subject of taxation.
Crypto miners will also get tax exemptions, as “there is no identifiable connection between miners and transaction verification with the reward miners receive from mining.” Note that, if a miner allocates resources to an identifiable party, they would fall under the “taxable supply of service” category.
The document was uploaded to ignite a broad discussion on the topic with business owners and crypto enthusiasts. Additional propositions about changes in the new regulatory framework must be submitted until July 26, 2019.
Despite the plans of eliminating taxations for cryptocurrencies, Singapore’s central bank was reported to be taking part in international talks about the Facebook’s Libra token. According to the new propositions, Libra should not be categorized as a “tax-free” cryptocurrency, as Facebook had included a descriptive overview in Libra`s whitepaper that their token will be backed by a basket of cryptocurrencies and securities.