Singapore official taxation agency is proposing to exempt its associated GST [Goods and services tax] fees on cryptocurrency transactions that are aimed to operate as a medium of exchange.
The IRAS [Inland Revenue Authority of Singapore] ‘revealed‘ earlier on last Friday an e-Tax draft guide for treatment on what it calls the “Digital Payment Tokens,” seeking to exempt the GST liabilities for any entity handling such as assets.
If this draft guide passes the legislation, then from 1st January, 2020, the subsequent changes will go into implementation to “better mirror the characteristics of digital payment assets:”
(1) The employment of digital payment assets as payment for goods or services won’t give rise to a supply of these tokens;
(2) The exchange of digital payment assets for the fiat currency or any another digital payment asset are exempt from GST.
The IRAS declared that the e-Tax remains in its draft form and also the Ministry of Finance are holding a public consultation from now till 26th July on the “legislative amendments for digital payment assets.”
The draft guide has conjointly set out an in depth parameter on how digital payment assets are outlined, that ought to have all of the listed characteristics below:
1) It’s expressed as a unit;
2) It’s fungible;
3) It’s not denominated in any currency, and isn’t pegged by its issuer to any currency.
4) It can be transferred, stored, listed or traded electronically;
5) It is, or is meant to be, a medium of exchange accepted by the general public, or a section of the public, with none substantial restrictions on its use as consideration; but doesn’t include:
Moreover, the agency outlined that the stablecoins, a kind of cryptocurrency designed to have its worth pegged to a fiat currency, might not qualify to be GST-exemption.
“Any digital token that’s denominated in any fiat currency or with a worth pegged to any fiat currency won’t qualify as a digital payment asset,” the IRAS added within the draft.
IRAS said that such effort to end GST liabilities on ‘cryptocurrencies’ follow the global development and growth within the space that led to several jurisdictions to have reviewed their stance. “Similarly, IRAS has reviewed its GST position to stay up to date with these developments,” the agency added.
Under the present framework, the availability of digital payment assets remain as a taxable supply of services.
While explaining further, the IRAS added:
“Therefore, the sale, issue or transfer of such tokens under a GST-registered business is subject to GST. While, when the tokens are used as payment for the acquisition of products or services, a barter trade leading to 2 separate supplies arises – a taxable supply of the tokens and a supply of the goods or services.”
Earlier in Oct. 2017, lawmakers in Australia ‘passed‘ a legislation to end what was referred to as double taxation, exempting the liability for paying GST on the purchase of ‘cryptocurrencies’.