Singapore is planning to introduce certain tax exemption on cryptocurrencies in the country, which could really benefit the businesses in the country, that exclusively deal in crypto.
A partner in PwC Hong Kong’s corporate tax practice, has recently analysed the prposed tax exemptions in Singapore, and has arrived at the above conclusion.
Singapore’s government has in reality proposed to drop the seven per cent GST for cryptocurrencies when using them to pay for goods and services, and Gwenda Ho, the analyst in question, has argued that this would massively benefit cryptocurrencies.
“While this proposal would improve Singapore’s competitiveness in its GST treatment on cryptocurrencies, Hong Kong in comparison is completely free of any sales tax so there is one less tax issue to be concerned about for cryptocurrency industry participants.”
According to Ho, crypto exchanges, asset managers and blockchain entrepreneurs in particular would benefit from this tax cut majorly.
If this tax cut is made, Singapore’s sales tax regime will be quite similar to the likes of other jurisdictions such as Hong Kong, Australia, Japan, Switzerland, and the European Union.
The exemption was initially considered by Singapore’s Inland Revenue Authority way back in July. The draft document outlines the two primary proposed changes to taxation rules:
“The use of digital payment tokens as payment for goods or services will not give rise to a supply of those tokens; and (ii) The exchange of digital payment tokens for fiat currency or other digital payment tokens will be exempt from GST.”
If this proposal goes through, then the rules will come into effect on Jan. 1, 2020.