Inland Revenue Authority of Singapore publishes Draft of Tax guide on Cryptocurrencies

On 05 July 2020, an IRAS e-Tax Guide (Draft) was published by the Inland Revenue Authority of Singapore (IRAS) that tends to explain the treatment of Goods and Service tax (GST) for the transactions that involve digital currencies as a medium of exchange.

The draft referred to cryptocurrencies as digital payment tokens. Moreover, crypto enthusiasts and folks who wanted to spend their cryptocurrency like cash, cryptocurrencies will not be subject to any GST under this new guidance, changes will take effect from January 1, 2020.

Furthermore, it states in the draft that if one is paying digital tokens (cryptocurrency) for any goods or services, one is not to account for the output tax. However, for the other side of the transaction, the merchant would have to account for that sale.

It is noteworthy that crypto assets pegged to any other currency, stablecoins, loyalty points, game credits, and privately issued tokens are not included in the digital payment token’s definition.

The US lawmakers are also trying to introduce policies that would then enable the spending of digital currencies easier. A new guideline on the digital currencies is expected by the Internal Revenue Service soon. The last guideline was issued back in 2014. Crypto enthusiasts are optimistic about the mainstreaming of cryptocurrency and its use specifically with reference to capital gains tax.

Lastly, Singapore’s Ministry of Finance (MOF) will be conducting Public Consultations regarding the legislative amendments for the digital payment tokens from 5th July-26th July 2019.