The intention of the Singapore authorities to provide exemption for some crypto coins from the Goods and Services Tax (GST) could help boost the growth of crypto-related establishments, according to a PwC Hong Kong expert.
Reported by the South China Morning Post on July 29, Gwenda Ho – a PWC Hongkong corporate tax practice partner – believed that the plan of the Singapore government, to lower the GST level by 7%, whenever digital currencies are used as a means of payment for goods and services, could potentially have a good effect on crypto exchanges, asset managers and blockchain entrepreneurs.
According to Ho, should the law be officially enacted, Singapore’s sales tax regime would be on the same level as those in other regions, such as Hong Kong, Australia, Japan, Switzerland, and the EU. Ho claimed that, as long as the token still possessed characteristics of a payment token that matched the requirements from the laws, the same type of proceeds from ICOs could also receive a GST exemption.
“While this proposal would improve Singapore’s competitiveness in its GST treatment on cryptocurrencies, Hong Kong in comparison is completely free of any sales tax so there is one less tax issue to be concerned about for cryptocurrency industry participants.” Ho added.
Singapore’s Inland Revenue Authority has previously discussed the exemption proposal in July. Should it be approved, the law would be effective beginning January 1, 2020.
“The use of digital payment tokens as payment for goods or services will not give rise to a supply of those tokens; and (ii) The exchange of digital payment tokens for fiat currency or other digital payment tokens will be exempt from GST.” 2 major amendments proposed in the new law.