In a significant move towards cryptocurrency adoption, Singapore is planning to do away with Goods and Services Tax (GST) on cryptocurrencies. According to a draft released by the national Inland Revenue Authority, the proposed bill, if passed, would be effective from 1 January 2020.
The news comes after the recent successful cross border payment transaction between the central banks of both Singapore and Canada, which was conducted through Distributed Ledger Technology.
Revised Taxation Intended as a Relief for Digital Enterprises
Digital currency in Singapore functioning as a medium of exchange has been subjected to a system of barter trade firstly taxable and secondly as a source of supply for commodities. The draft states the two significant changes affecting digital currencies:
The use of cryptocurrency as a form of payment for commodities would not lead to a surplus increase in the supply of the aforementioned tokens and secondly the exchange of cryptocurrency would be barred from Goods and Services Tax (GST). The digital currency fitting the criteria of an online payment token serving as an exchange medium include Bitcoin, litecoin, ether, monero, XRP, dash, and Zcash.
IRAS has excluded from its list stablecoins as a form of digital exchange medium. The fiat pegged stablecoins would still be taxable under GST starting January of next year. Regarding digital mining, the IRAS has stated that the proposed law would bar tokens generated through mining.
Singapore’s tax officials are reportedly looking for approval from businesses and enterprises in the crypto sector on the newly proposed laws. The feedback must be reported before 26 July 2019. In June 2019, the central bank of Singapore and Facebook had a joint discussion about the former’s libra token. The libra token would be pegged to a wide number of government securities and bank deposits.