Singapore says it is planning to table legislation to end VAT on transactions using cryptocurrencies.
The Inland Revenue Authority of Singapore (IRAS) said the supply of “digital payment tokens” in exchange for fiat currency or other digital payment tokens would be exempt from the goods and services tax (GST).
The proposal could become effective at the start of 2020 if enacted into legislation. The IRAS is seeking comments from firms using cryptocurrencies by July 26.
The IRAS says digital payment tokens must not be pegged by its issuer to any currency or intended to be a medium of exchange accepted by the public without any substantial restrictions.
Bitcoin, ether, litecoin, dash, ripple, monero, Zcash and XRP were examples of digital payment tokens, the IRAS said.
It said the effort to end GST liabilities on cryptocurrencies followed a worldwide trend.
“Similarly, IRAS has reviewed its GST position to keep up to date with these developments,” the agency said.
“The sale, issue or transfer of such tokens for consideration by a GST-registered business is subject to GST. When the tokens are used as payment for the purchase of goods or services, a barter trade resulting in two separate supplies arises — a taxable supply of the tokens and a supply of the goods or services,” the IRAS proposal added.
However, it specified that stablecoins might not be exempt from GST.
In October 2017, Australia ended so-called double taxation, exempting the liability for GST on cryptocurrency purchases.
Increasing amounts of small-batch production investment are coming to Singapore in the wake of escalating US-China trade war, according to Trade and Industry Minister Chan Chun Sing.
He told MPs that “high-mix, low-volume” investment to factories producing small numbers of varied items was the kind of manufacturing that could relocate to Singapore.
The Lion City strong intellectual property regime, agile regulatory frameworks and robust distribution networks was proving attractive, Chan added.
“Singapore doesn’t compete with the rest of the regional economies for the entire shift in the global production chain,” he told parliamentarians. “There are some things that we do much better, there are some things that will not be relocated here.”
Singapore’s high labour and land costs would prove deterrents to other employers, he said
“But what will come to Singapore will be what we call high-mix, low-volume [production]. This is where trust, standards, quality assurance [and] intellectual property protection will become very important. We have seen more of such investments in Singapore.”
UK pharmaceutical giant GlaxoSmithKline opened two new manufacturing operations in the city-state last week, he added.
The firm was investing more than US$100 million to produce medicine in an example of “high-mix, low-volume” production, the minister said.
Singapore could lead the way in cryptocurrency acceptance. Picture credit: Wikimedia