The state taxation agency in Singapore proposes to discard the Goods and Services Tax (GST) for crypto transactions that are functioning like an exchange method.
The suggestion was published as a draft guide by the Inland Revenue Authority of Singapore (IRAS) last Friday. It states that all “Digital Payment Tokens” should be exempt from GST responsibilities. If this text passes into law, the below-cited changes will take effect from 1st January 2020 and would “better reflect the characteristics of digital payment tokens”.
- “(i) The use of digital payment tokens as payment for goods or services will not give rise to a supply of those tokens.
- (ii) The exchange of digital payment tokens for fiat currency or other digital payment tokens will be exempt from GST. “
As the IRAS noted themselves that this guide is still a draft and may undergo changes as the Ministry of Finance will hold a public discussion on “legislative amendments for digital payment tokens.” until July 26. In addition to the recommendations, IRAS also gave a strict definition of a “digital payment token”. More specifically, to be defined as one, a token should have all of the following characteristics:
- It is expressed as a unit
- It is fungible
- 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, or is intended to be, a medium of exchange accepted by the public, or a section of the public, without any substantial restrictions on its use as consideration.
As stated in the proposal, such digital payment tokens are: “Bitcoin, Ethereum, Litecoin, Dash, Monero, Ripple and Zcash”.
On the other hand, IRAS noted that stablecoins would not qualify for GST exemption, as they are created to possess a value that is pegged to a fiat currency:
IRAS commented that the GST-related proposal just follows the worldwide shift of sentiment towards cryptocurrencies, as foreign jurisdictions have already reviewed their crypto stances. For example. Australia saw lawmakers pass a bill that ended ‘double taxation’ as early as October 2017.