Singapore Clarifies Taxation Policy On Bitcoins

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Singapore Clarifies Taxation Policy On Bitcoins
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The Singapore tax authorities have issued clarifications regarding the treatment of transactions in Bitcoins, the virtual currency.

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The Inland Revenue Authority of Singapore responded to Coin Republic’s requests to clarify the tax treatment of the purchase and sale of Bitcoins, and in the words of David Moskowitz, Coin Republic’s founder, “the guidance which IRAS laid out is rational and well thought out.”

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Singapore’s initiative to clear the air on this issue is one of the first of its kind in the world. Take note, however, that the guidelines merely view the virtual currency as just another product, or investment, changing hands and do not accord any official recognition to the virtual currency (VC).

Singapore’s stand on VCs

Singapore’s stand on VCs has been consistent:

  • VCs are not legal tender in Singapore
  • In Singapore, only the Monetary Authority of Singapore (MAS) has the sole right to issue currency and coins that are legal tender
  • VCs are also not considered as securities under the island’s Securities and Futures Act, and therefore VC exchanges are unregulated by the Singapore authorities

Last month, MAS clarified its “hands-off” approach in an email, again to Coin Republic, saying “Whether or not businesses accept Bitcoins in exchange for their goods and services is a commercial decision in which MAS does not intervene.”

Earlier, the island country had cautioned consumers on Bitcoin, and a spokesman for the MAS had said in September that “If Bitcoin ceases to operate, there may not be an identifiable party responsible for refunding their monies or for them to seek recourse.”

Singapore’s Bitcoin taxation guidelines

Here are the main features of Singapore’s taxation policy on Bitcoins:

  • Since Bitcoins are neither a currency nor money, transactions will attract taxation as those of ‘goods’ or ‘services,’ and not as an exchange of currency.
  • Where the Bitcoins are held as long-term investments, any profits thereon would be ‘capital gains,’ which are tax-free in Singapore.
  • Where Bitcoins bought or sold by paying/receiving real money, the transaction would attract GST as it would constitute a taxable supply of services by the seller.
  • Where Bitcoins are used to purchase real goods or services, the transaction is recognized as a ‘barter exchange’ and GST would apply.

However, there is a view that the guidelines would subject Bitcoins to multiple taxation at various points of the transaction chain.

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Saul Griffith is an investor in stocks, commodities and forex, writing under a pen name. Saul has top accounting qualifications and extensive experience in industry and the financial markets. He also has an abiding interest in breaking news that could be a harbinger of new trends and give insight into an instrument’s potential for providing value, growth or yield.
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2 COMMENTS

  1. Please stop trying to spread panic, it’s actually just getting amusing
    now, this article is about how the Singapore government is legally
    defining Bitcoin rather than actually being able to regulate it, as
    people have speculated on these boards the only way somebody could
    probably attack Bitcoin is with a quantum computer lol, they aren’t
    going to be able to tax it, not directly anyway the technology just
    doesn’t allow for easy confiscation or centralised interference.

  2. Short-sighted and kneejerk policy, without giving much thought to what Bitcoin/Litecoin actually are and how they will be used 2, 5 or 10 years from now. Doesn’t address income from mining at all, causes people to potentially be taxed multiple times on the same money…it’s inelegant and poorly thought-out, done with the the clear desire to avoid acknowledging Bitcoin/Litecoin as currency.

    “Legal tender” is such a smokescreen. Anyone can use anything to pay for goods and services, if the vendor of said goods and services decides to accept it as payment. The writing is on the wall, and they know it…the world is losing its taste for government-issued fiat and central bank mismanagement and abuse.

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