Singapore issues tax guidance on Bitcoins

Singapore's tax authority has outlined where tax is payable on Bitcoin transactions made by its local businesses.

The Inland Revenue Authority of Singapore (IRAS) has laid out tax advice regarding the purchase, sale, and exchange of Bitcoins for local businesses and individuals.

In response to queries from Coin Republic owner David Moskowitz, the IRAS provided guidance on how to treat Bitcoin in regards to income tax and goods and services tax (GST).

Under the advice provided by the IRAS, if a Singaporean business offers the buying and selling of Bitcoins, they will be subject to taxation on the gains made on the sale of Bitcoins. However, if the Bitcoins form part of the business' investment portfolio, the IRAS considers the gains from any sale to be capital in nature and not subject to taxation.

For GST, however, the situation is a little more complicated. Selling Bitcoins in return for goods or services is considered to be subject to GST. If the seller is GST registered, they will need to account for this in the course of their business activities.

The exception to this is in the form of virtual goods, such as in virtual gaming worlds, to use the IRAS' example. These are not subject to GST until they are exchanged for real services or goods.

Bitcoin itself is not considered a good, nor does it qualify as money or currency, according to the IRAS and under Singapore's GST Act. Instead, the supply of Bitcoins is examined under GST and varies according to how the service is provided.

"If the company merely facilitates and is acting as an agent in the Bitcoin trade (eg, Bitcoin exchange transfer Bitcoins directly to the customer's wallet), GST is chargeable only on the commission fees received. However, if the company is acting as a principal in the Bitcoin trade (eg, buys and onward sells Bitcoins to the customer), GST is chargeable on the full amount received, ie, the sale of Bitcoins and commission fees."

Singapore's GST Act already indicates that if the business supplying services belongs to another country, then the entire supply shall be deemed to have been made outside of Singapore. The IRAS states that this would mean that GST would not be imposed.

The full email response from the IRAS to Moskowitz is available on Coin Republic.