The Singaporean taxation department has recommended a major cryptocurrency taxation overhaul that would have significant benefits for users of Bitcoin and other cryptocurrencies.
The department, known as the Inland Revenue Authority of Singapore (IRAS), has proposed to make the ‘use’ and ‘exchange’ of digital tokens completely exempt from GST.
The crypto tax cut plan has been outlined in a draft document published online and, if accepted by the parliament, would come in effect from the start of next year.
“Under the current rules, the supply of digital payment tokens is treated as a taxable supply of services,” the document states.
“Therefore, the sale, issue or transfer of such tokens for consideration by a GST-registered business is subject to GST.
“When the tokens are used as payment for the purchase of goods or services, a barter trade resulting in two separate supplies arises — a taxable supply of the tokens and a supply of the goods or services.”
Singapore continues crypto leadership
In 2014, Singapore became just the second country in the world to regulate Bitcoin trading.
At the time, the Government surprised many by not condemning the relatively new form of currency, instead making it mandatory for exchanges to verify client’s identities and report any suspicious behaviour.
Four years later, the Central Bank of Singapore finalised a new Bill for crypto payments, again one of the first of its kind in the world.
“(The Bill) will provide a more conducive environment for innovation in payment services, whilst ensuring that risks across the payments value chain are mitigated,” said the Central Bank at the time.
The latest crypto taxation move indicates the government is actively looking at ways to make crypto use safer and more efficient for its 5.5 million residents.