A tax gaps has been seen in Singapore on digital tokens, a catchall for three crypto types including payment tokens, utility tokens and security tokens. The report came very recently with the revelation of the Inland Revenue Authority of Singapore (IRAS)’s new e-tax guide.
The guide came with a divided approach for this emerging industry and is a meant as a guide for consumers and businesses. The tax guide has cleared many other things. For example to mention that, IRAS will not charge income taxes against airdropped payment tokens, those coming from blockchain hard fork and some other.
The guidance entitling bitcoin to be intangible property said if anyone pays in bitcoin that means he engaged himself in a barter trade. It is likely that the same happens in the case of those businesses who value their good’s tax burden against government money metrics.
But problem gets tough with tax burden when paying is done in Bitcoin because IARS has no methodology to value payment tokens. On the contrary to that utility token transactions have been counted as a deductible event because this type of transaction won’t refer to a taxable event for the user.
In Singapore, security tokens are taxable only when it is classified as a revenue asset. For security tokens there is the same tax law as Asia’s tax haven applies to other securities indeed. Security token ICO issuers in Singapore have the right of capital issuers because of the favorable investor-friendly tax scheme. Their proceeds are effectively deferred revenue that is taxable soon as they deliver the good. The government of Singapore has been very open to cryptocurrency trading and blockchain technology.
Because of the support from the statesmen, Singapore became the home of some world’s largest cryptocurrency exchanges and one of the top three countries for Initial Coin Offerings (IPO). The government of this beautiful city is amazed at the nature of cryptocurrency that includes speculative nature, decentralization and volatility and the statesmen has warned retail investors to generally stay away from cryptocurrencies.