Good news for cryptocurrency investors, traders and users in Singapore!
Singapore has disclosed plans to exclude Goods and Services Tax (GST) from cryptocurrencies that are used as a means of buying or selling of goods and services across the country. The GST is similar to a Value-Added Tax.
The Inland Revenue Authority of Singapore (IRAS) disclosed the plan via a written e-tax guide that was published in the first week of July.
The planned exclusion, if endorsed, will become effective from January 1, 2020 and we replace the present model in which the use of cryptocurrencies is considered a taxable means of services.
According to IRAS, up until this moment, cryptocurrencies that are used, or are planned to be used as a means of buying and selling have been considered a barter trade that caused two different supplies.
The first is a taxable cryptocurrencies supply while the second is the supply of the needed goods and services.
The written document indicated two major changes to taxation regulations going forward as follows:
- Using cryptocurrencies as payment for goods and services will not lead to the supply of such currencies.
- 2. The use of cryptocurrencies for trading and other forms of payments will be excluded from GST.
Since there are so many cryptocurrencies in the market, one is tempted to ask if all of them are exempted from the GST or just some of them.
Are all digital currencies exempted from the tax?
According to the IRAS, seven cryptocurrencies made it to the list of recognized cryptocurrencies that are eligible for the GST exemption. These are:
These cryptocurrencies are recognized as a legal medium of exchange.
Furthermore, in a distinct section dedicated to mining cryptocurrencies, the IRAS recommended that in many instances, the new law will exclude token benefits that are obtained by mining.
According to the document, in the event that a miner did his or her job to a recognized party or parties, in exchange for a consideration, this will be considered a taxable supply of services.
Singapore’s tax authorities await response from firms and businesses in the crypto industry on the planned changes which are expected to be given on or before 26 July 2019.
Less than a month earlier, Cointelegraph disclosed that Singapore’s central bank had talks with social media giant, Facebook regarding its planned Libra token. This token, according to the Libra White Paper, will be measured to a basket of bank deposit as well as government securities that are short term and held in reverse.
If you’re a digital currency trader in Singapore, will you support the new government plan to exempt GST or do you think it will have a negative impact on the value of cryptocurrencies?
Also, only seven cryptocurrencies were considered genuine enough to benefit from the exemption, are there other widely-used cryptocurrencies that are worthy of the exemptions?
What about the value of digital currencies? Will the new law trigger a rise, a fall, or stabilize the currency’s value? Share your thoughts and expectations in the comment!