The government of Singapore is planning to end goods and services tax (GST) (or value-added tax (VAT) as known in some countries) on cryptocurrencies that function or are intended to function as a medium of exchange.
The Inland Revenue Authority of Singapore (IRAS) published draft GST guidelines on Friday, stating that the supply of “digital payment tokens” in exchange for fiat currency or other digital payment tokens will be exempt from GST. Therefore, the supply of such tokens, being an exempt supply, “will not contribute to your annual taxable turnover for the determination of your liability for GST registration.”
The proposal, if passes legislation, will become effective from January 1, 2020. The IRAS is currently seeking comments from cryptocurrency businesses, and they need to respond by July 26.
The IRAS has defined digital payment tokens as having the following characteristics:
“(a) it is expressed as a unit; (b) it is fungible; (c) it is not denominated in any currency, and is not pegged by its issuer to any currency; and (d) it is, or is intended to be, a medium of exchange accepted by the public, without any substantial restrictions on its uses as consideration.”
Bitcoin (BTC), ether (ETH), litecoin (LTC), dash (DASH), monero (XMR), Zcash (ZEC) and XRP are examples of digital payment tokens, the IRAS said.
Notably, stablecoins do not qualify as digital payment tokens as per the definition by the authority. “A digital token pegged to US dollars will not qualify as a digital payment token but may instead fall under the list of financial services,” it said.