Singapore Set to Tax Bitcoin Gains According to Coin Republic

In our review of global bitcoin regulation to start of the new year, we posted that the Monetary Authority of Singapore (MAS) appeared to be taking a ‘hands off’ approach from bitcoins and alliowing them to freely trade in the country. In terms of taxation, that question and its answer were less concrete.

However, that appears to have changed, as Singapore based Coin Republic, a Bitcoin Bitcoin While some may still be wondering what is Bitcoin, who created Bitcoin, or how does Bitcoin work, one thing is certain: Bitcoin has changed the world.No one can remain indifferent to this revolutionary, decentralized, digital asset nor to its blockchain technology.In fact, we’ve gone a long way ever since a Florida resident Laszlo Hanyecz made BTC’s first official commercial transaction with a real company by trading 10,000 Bitcoins for 2 pizzas at his local Papa John’s.One could now argue that While some may still be wondering what is Bitcoin, who created Bitcoin, or how does Bitcoin work, one thing is certain: Bitcoin has changed the world.No one can remain indifferent to this revolutionary, decentralized, digital asset nor to its blockchain technology.In fact, we’ve gone a long way ever since a Florida resident Laszlo Hanyecz made BTC’s first official commercial transaction with a real company by trading 10,000 Bitcoins for 2 pizzas at his local Papa John’s.One could now argue that Read this Term Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term and provider of news and analysis of the industry, has posted on its site an email exchange with the Inland Revenue Authority of Singapore (IRAS) in regards to taxation.

According to the exchange with Coin Republic’s David Moskowitz, the IRAS bases bitcoin related profit as based on either business gains or investment profit by stating “Companies which are in the business of buying and selling bitcoins will be taxed based on the gains from their sales of the bitcoins. On the other hand, if the bitcoins are part of the company’s investment portfolio acquired for long term investment purposes, the gains from the sales will be capital in nature and thus not taxable for the company."

For firms receiving bitcoins as payment, the IRAS stated that tax considerations are based on the purchased item. When used to acquire real goods and services, they would be taxed based on the values of the received bitcoins and sold items, using calculations that are applied for barters. However, for sales of virtual goods, they stated that “the supply of bitcoins will not be taxed until the bitcoins are exchanged for real monies, goods or services."

The IRAS added though that bitcoins don’t fit under the definition of a currency. As a result, under terms of the Goods and Services Tax (GST) Act bitcoins are being treated as a supply of services; thereby leading to calculations falling under the rules barter tax accounting.

"As bitcoin does not fall within the definition of ‘money’ or ‘currency’ under the GST Act, a supply of bitcoins is not a supply of money and would not be disregarded for GST purposes. The supply of bitcoins would be treated as a supply of services as it involves the granting of the interest in or right over the bitcoins."

As stated in our earlier post about the MAS, more than just Singapore, financial rulings in the country could have greater regional effects. In the Bank of Settlements (BIS) most recent triennial FX survey, it was shown that Singapore overtook Japan as Asia’s largest center for primary bank foreign exchange transactions. This has occurred as Singapore has become a key player in bridging East and West trade. Therefore, as an important financial hub, with cross-border impact, freedom of bitcoin trade could lead to additional country’s taking similar stances as Singapore.