July 09, 2019

Andrew Campbell 

On July 5, the Inland Revenue Authority of Singapore (IRAS) published a report titled “GST: Digital Payment Tokens,” proposing exemption of goods and services tax (GST) on cryptocurrency transactions that functioned as a medium of exchange. In the e-Tax draft guide, IRAS specified, “The use of digital payment tokens as payment for goods or services will no longer give rise to a supply of those tokens.” In other words, it is not necessary to pay GST when using digital payment tokens.  

The e-Tax draft guide listed the following characteristics of the eligibility criteria of any cryptocurrency: “it is expressed as a unit; it is fungible; it is not denominated in any currency, and is not pegged by its issuer to any currency; and it is, or is intended to be, a medium of exchange accepted by the public, without any substantial restrictions on its uses as consideration.”

Thus, digital payment tokens such as Bitcoin, Dash, Ethereum, Litecoin, Monero, Ripple and Zcash were used as examples to qualify in GST exempt. Meanwhile, stablecoins, a type of cryptocurrency designed to have a value pegged to a fiat currency, may not qualify to be GST exempt by IRAS definition. GST exempt proposed by IRAS excluded any fiat-pegged token from a digital payment token.

The Ministry of Finance is seeking public consultation until July 26 before official debates within the Singapore government. If passed into legislation, the law of GST exempt on cryptocurrency transactions will come into effect from January 1, 2020. 

Notably, Australia had passed in October 2017 legislation to end what was referred double taxation, exempting GST liability on cryptocurrency purchases.

Photo:Webshot.