The Inland Revenue Authority of Singapore (IRAS) recently said that it is considering removing the value-added tax for ‘digital payment tokens’ when traded. If approved, the proposal would go into effect during the start of 2020.
Singapore could soon have the most crypto-friendly tax code in the world thanks to a new proposal by the Inland Revenue Authority of Singapore (IRAS). According to the IRAS, the plan is to make cryptocurrencies which are traded for fiat currency or other cryptocurrencies exempt from the VAT tax entirely.
Cryptocurrencies to Be Tax-Exempt?
Currently, the plan is just a proposal but the government agency is already surveying various companies who work with cryptocurrencies for their opinions. The proposal mentions that the exemption would apply to ‘digital payment tokens’ like Bitcoin, Ethereum, Litecoin, and Monero. It must be digital payment tokens not pegged to any issuer or currency.
Additionally, the IRAS is also looking into removing goods and services tax (GST) liabilities on cryptocurrencies as well. This would be in line with other nations who have adopted similar tax codes. The IRAS specifies, however, the so-called ‘stablecoins’ would not be exempt from the GST.
Singapore Expecting a Crypto-Boom
With the new proposal, Singapore is attempting to position itself as one of the leading hubs of cryptocurrency innovation in Asia. Investments have increased in the country following the US-China trade war, and more money is expected to pour into the Singaporean economy as the year goes on.
Due to Singapore’s high labor and land costs, most of the country’s economy is going digital. “This is where trust, standards, quality assurance [and] intellectual property protection will become very important,” Trade and Industry Minister Chan Chun Sing told reporters.
Singapore is already known as a major hub for cryptocurrencies, but the recent VAT exemption would make it even more attractive for investors. Many cryptocurrency traders have often complained about how crypto-to-crypto trades are taxed in most countries, like the United States. Singapore, therefore, could set a precedent for other nations to follow if it ends up attracting significant blockchain investment.
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