The Singapore government’s tax agency proposal to remove the Goods and Services Tax (GST) from cryptocurrency transactions could give the booming industry a boost, experts and industry participants say.
Earlier this month, the Inland Revenue Authority of Singapore (IRAS) issued a Draft e-Tax guide outlining the tax treatment of “digital payment tokens” and unveiled its intention to exempt cryptocurrency transactions from the GST.
Under current rules, cryptocurrency used for payments is treated as a taxable supply of services, which means that the sale, issue or transfer of these tokens for consideration by a GST registered business is subject to the tax. to the GST.
If the bill becomes law, as of January 1, 2020, the use of cryptocurrency only as a means of payment for goods or services would be exempt from GST.
According to Zann Kwan, co-founder and CEO of Bitcoin Exchange Pte Ltd. in Singapore and a board member of the Singapore Cryptocurrency and Blockchain Industry Association (ACCESS), the move would make Singapore a pioneer in crypto regulation and accentuate the position of a blockchain hub.
For David Lee, a professor at the University of Social Sciences of Singapore and entrepreneur, the changes could give ICOs a new boost.
“My humble opinion is that the ICO will make a very strong comeback”,
Lee wrote in a Facebook post.
âI strongly suggest that ACCESS and the international crypto organizations focus all of their energy on the self-regulation of ICOs. It is the application that kills the blockchain.
The Ministry of Finance is requesting a public consultation on the legislative changes relating to digital payment tokens until July 26, 2019.
“The proposed changes to the GST are a positive measure that the ecosystem values ââin order to strengthen Singapore’s position as a cryptocurrency and blockchain innovation hub,”
Kwan wrote in a Publish.
âSingapore is now taking the lead in the taxation of cryptocurrencies for an aligned development of the cryptocurrency, blockchain and digital payment ecosystem. “
The proposed changes would not only avoid the problem of double taxation when accepting virtual currency as a means of payment, but would also be “one of the most tax-friendly regulations in the world for non-securitized token offerings, among the various financial centers â. Kwan wrote.
Comparing Singapore’s proposed regulatory changes with those of its international counterparts, Kwan notes that in Australia, there is currently no GST obligation when virtual currency is used to pay for goods and services. However, the processing is not extended to Initial Coin Offerings (ICOs), which means that ICO income may still be subject to a 10% GST.
Likewise, in the UK, when bitcoins are exchanged for sterling, no value added tax (VAT) is due on the value of the bitcoins themselves, but ICO income is likely to be subject to the 20% VAT rate.
“This means that Singapore is the pioneer among global financial centers to establish user-friendly and well-defined TPS regulations for non-securitized tokens,”