The Inland Revenue Authority of Singapore (IRAS) that currently levies double taxes on the usage of cryptocurrencies is proposing changes to the taxation set-up. As per the existing taxation rules, whenever cryptocurrency is used to buy goods or services, the users have to pay the tax twice. This is because such a trade is considered as barter trade which involves the supply of both digital tokens and goods and services.
Expecting to bring this change by 1st January 2020, IRAS will exempt GST over the exchange of digital tokens for fiat currency. According to the IRAS e-Tax Guide released on 5th July 2019, the business entities dealing in cryptocurrencies are being asked to share their feedback about the changes by 26th of July.
As stated in the draft, GST exemption will be valid only for the digital payment tokens and not the cryptocurrencies that are pegged to a tangible product or fiat pegged currencies. To avoid any issues, IRAS has also shared an outline of what qualifies as a digital payment. Bitcoin, Ethereum, Dash, Litecoin, Monero, XRP, and ZCash do fall under the umbrella that will exempt dual taxation.
The proposed change and its outline keep stable coins like Tether and Libra out of the scope of being called a digital payment token. Thus usage of these coins would attract double taxation despite the change.
Singapore has been trying to keep pace with all the developments of the crypto sphere and this is a big move that favors real-world usage of cryptocurrencies.