Singapore revenue authority recognizes and taxes Bitcoin

Last updated on January 2nd, 2018 at 12:00 am

The Inland Revenue Authority of Singapore (IRAS), the entity responsible for the country’s tax law, has determined to recognize Bitcoins spil “goods”, not a currency, and issued some guidelines on how to treat capital gains, earnings and sales tax on Bitcoin exchanges and related sales.

The authority exposed the decision by sending several emails to the Singapore-based Bitcoin brokering toneel Coin Republic, who sought clarifications regarding the government’s position towards the taxation of cryptocurrency transactions. The emails explain which zuigeling of operations will be the target of Singaporean taxes.

Singapore’s Revenue House

From now on, the companies that overeenkomst ter Bitcoin – whether it is buying and selling it or exchanging the digital currency for other goods and services – and are registered te the island are ordered to pay taxes for thesis transactions.

Singapore’s view on Bitcoin seems to geluidsweerkaatsing the opinions already made public by other countries, such spil Norway or Germany, that also consider the digital coin taxable.

Te the case of companies that buy or sell Bitcoins, the proclaimed taxes should be based on gains from the sales of the cryptocurrency. On the other side, if said companies determine to invest ter Bitcoin for the long-term, then all gains will be capital te nature and not taxable.

When Bitcoin is accepted spil a payment for goods or services, the transactions should be treated spil barter exchanges because Bitcoin is not considered money or currency by the government, but rather a “good”. So, the Goods and Services Tax (GST) – which is presently pegged at seven procent – could apply to both Bitcoins and the goods or services being exchanged.

However, the virtual currencies used ter the gaming world are free from the tax, spil reports.

Ter other case, if a company is buying and selling Bitcoin directly to customers, like exchanges do, the tax applies to the utter amount received and also to the commission fees. Nevertheless, this rule is only mandatory for the businesses registered ter Singapore.

Back ter late December, the Monetary Authority of Singapore announced that digital currencies wasn’t regulated te the city-state so far and that the local companies and merchants are free to accept and transact ter cryptocurrency. They still are, but now there are rules to go after and taxes to pay.

According to David Moskowitz, from Coin Republic, “the guidance which IRAS laid out is rational and well thought out. Spil a business proprietor, I can clearly account for my earnings on Bitcoin trades for my clients and my own positions and pay the decent taxes”.

The service representative published parts of the emails sent by the tax authority on the podium’s webstek:

Companies which are ter the business of buying and selling bitcoins will be taxed based on the gains from their sales of the bitcoins. On the other palm, if the bitcoins are part of the company’s investment portfolio acquired for long term investment purposes, the gains from the sales will be capital ter nature and thus not taxable for the company.

The sale (including the exchange) of bitcoins ter come back for a consideration ter money or te kleintje is a taxable supply of services subject to GST. If the seller is a GST-registered person, he would have to account for output tax on the sale of bitcoins made ter the course or furtherance of his business.

Where bitcoins are accepted spil payment for real goods or services (e.g. digitized items like online music), such transactions are treated spil a barter exchange. GST should be accounted for on the individual supplies made (i.e. the supply of bitcoins and the supply of real goods or services) if the parties involved are GST-registered persons. However if the bitcoins are used to exchange for virtual goods or services within the virtual gaming world, spil a concession, the supply of bitcoins will not be taxed until the bitcoins are exchanged for real monies, goods or services.

Spil bitcoin does not fall within the definition of ‘money’ or ‘currency’ under the GST Act, a supply of bitcoins is not a supply of money and would not be disregarded for GST purposes. The supply of bitcoins would be treated spil a supply of services spil it involves the granting of the rente ter or right overheen the bitcoins.

The GST treatment of the supply of bitcoins will depend on whether the company is acting spil an smeris or principal te the transaction. If the company merely facilitates and is acting spil an tuut te the bitcoin trade (e.g. bitcoin exchange transfer bitcoins directly to the customer’s wallet), GST is chargeable only on the commission fees received. However if the company is acting spil a principal ter the bitcoin trade (e.g. buys and onward sells bitcoins to the customer), GST is chargeable on the total amount received, i.e. the sale of bitcoins and commission fees.

Under section 13(Four) of the GST Act, a supply of services shall be treated spil made ter another country if the supplier belongs te that other country. Ter this case, if the company belongs outside Singapore (i.e. there is no business or immobile establishment te Singapore), the supply of bitcoins shall be treated spil made outside Singapore. Accordingly, GST is not chargeable on the supply of services (i.e. bitcoins) made outside Singapore.

Overall, the GST treatment of bitcoins will depend on the business regeling and contractual terms inbetween the parties involved.

Albeit the decision is not faced spil a positive switch by everyone, especially te Singapore, David Moskowitz is pleased: “while most governments are scraping their goes about how to treat Bitcoin, Singapore has once again shown its leadership te the region by letting Bitcoin businesses and merchants know how to treat taxation on transactions.”.

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