02. Taxation
Table of Contents
NFT
On 11 March 2022, Finance Minister Lawrence Wong announced in the Singaporean parliament that NFT trading would be taxed under existing income tax standards.
The minister clarified that the tax regulations will apply to people who generate income from NFT trading, but not to those who earn capital gains from NFTs.
Tokens
Individuals will not have to pay capital gains tax on their cryptocurrency holdings in Singapore.
For businesses, there is a special section on IRAS website addressing “Tax Treatment of Digital Tokens”.
Tax Treatment of Digital Tokens (Business Entities)
Extracted from IRAS website on 25 Oct 2021. Refer to IRAS website for updated documents with full details
Digital Tokens Received as Payment
Businesses that choose to accept digital tokens such as Bitcoins for their remuneration or revenue are subject to normal income tax rules. They are taxed on the income derived from or received in Singapore. Tax deductions are allowed, where permissible, under our tax laws.
Generally, these businesses should record the sale based on the open market value of the goods or services in Singapore dollars. The same applies for businesses which pay for goods or services using digital tokens.
If the open market value of the goods or services that would have otherwise been exchanged in Singapore dollars cannot be determined (e.g. the good or service is only traded with digital tokens), the digital token exchange rate at the point of the transaction may be used.
Buying and Selling Digital Tokens
Businesses that buy and sell digital tokens in the ordinary course of their business are taxed on the profit derived from trading in the digital token. Profits derived by businesses which mine and trade digital tokens in exchange for money are also subject to tax.
Businesses that buy digital tokens for long-term investment purposes may enjoy capital gains from the disposal of these digital tokens. However, as there are no capital gains taxes in Singapore, such gains are not subject to tax.
Whether gains from the disposal of digital tokens are trading or capital gains depends on the facts and circumstances of each case. Factors such as purpose, frequency of transactions, and holding periods are considered when determining if such gains are taxable.