Singapore’s Inland Revenue Authority Publishes New draft On GST For Crypto
The Inland Revenue Authority of Singapore (IRAS) publishes a draft guide that details the conduct of goods and services tax (GST) towards cryptocurrency transactions, owing to the increase in the use of cryptocurrencies as a mode of payment.
The draft refers to cryptocurrencies such as Bitcoin, Ethereum, Litecoin, Dash, Monero, Ripple(XRP) and Zcash as digital payment tokens. As per the draft, cryptocurrency users can spend their digital currencies like cash as they are no more liable to GST.
The new guidance will be in effect from January 1, 2020. According to IRAs, the GST position was reviewed so as to keep themselves updated with the latest crypto developments. It further recognizes that taxing cryptocurrencies would result in two tax points. One will be during the purchase of cryptocurrency and the other will be upon its usage as a payment method for other goods and services which are subjected to GST.
The draft also addressed the other side of the transaction, that involves the merchant to account for the sale. The draft read,
“If you are receiving digital payment tokens in return for your supply of goods or services and you are GST-registered, you would have to account for output tax on your supply of goods or services (unless the supply is an exempt or a zero-rated supply).”
“GST-registered company A uses Bitcoin to purchase software from GST-registered company B. With effect from 1 Jan 2020, Company A will not be considered as making any supply of Bitcoins and thus, will not need to account for output tax. Company B will have to account for output tax on its supply of software.”
Though the digital payment tokens tag does not include game credits, loyalty points or and tokens issued on private blockchains. Other exceptions include stablecoins and digital assets that are pegged to other currencies. Notably, while making the aforementioned change in the GST position does not mean that IRAS is endorsing cryptocurrency investments.
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