The Inland Revenue Authority of Singapore (IRAS) has recently introduced new regulatory guidance, in regards to the Goods and Services Tax (GST), concerning crypto payments.
Per the new guide, cryptocurrencies will be classified as “digital payment tokens”, meaning that the IRAS is looking to put digital coins in a different category, which would grant them exemptions from the GST. This is an attempt to extensively help with the development of the crypto industry in Singapore.
The guidance contains additional information regarding the new exemption the IRAS introduced, with a detailed plan for the courses of action, concerning crypto payment, beginning on Jan. 1, 2020.
“Under the current rules, the supply of digital payment tokens is treated as a taxable supply of services. Therefore, the sale, issue or transfer of such tokens for consideration by a GST-registered business is subject to GST. When the tokens are used as payment for the purchase of goods or services, a barter trade resulting in two separate supplies arises — a taxable supply of the tokens and a supply of the goods or services,” the draft specified.
In an effort to provide a better classification for crypto payment, IRAS has made a decision to recategorize them. This was because using crypto coins for payment does not result in the introduction of more crypto coins.
“The use of digital payment tokens as payment for goods or services will not give rise to a supply of those tokens. The exchange of digital payment tokens for fiat currency or other digital payment tokens will be exempt from GST.”
This development has come at a perfect time, as the crypto scene in Singapore is currently booming, with one of the biggest Ethereum wallets is set to move its business to Singapore.