New Singapore Crypto Tax Rules Could Help it Compete with Hong Kong
A PwC analyst says that new tax regulations could provide cryptocurrency exchanges and initial coin offering (ICO) issuers based in Singapore with a boost as the country chases down Hong Kong.
Both Hong Kong and Singapore have been wooing Asian crypto-enterprises, offering tax breaks to overseas companies that set up shop on their territory. However, Hong Kong is believed to have the edge in some respects, as cryptocurrency exchanges are totally exempt from paying sales tax.
Singapore-based enterprises, though, have often found themselves liable to pay tax twice on cryptocurrencies when using tokens to pay for goods or services. Currently, vendors are taxed once on the purchase of cryptocurrencies and again when they use these to make payments.
But a new proposal from the Inland Revenue Authority of Singapore (IRAS) seeks to remedy the discrepancy. As reported, the IRAS has proposed waiving sales tax (currently 7%) for “digital payment tokens,” while the country’s Ministry of Finance has also been consulting industry representatives and experts on sales tax reform this month. If the IRAS proposal is accepted by Singapore’s parliament and executive, the changes could take effect as of January 1, 2020.
The South China Morning Post quotes PwC tax partner Gwenda Ho as stating that, per her analysis of the IRAS proposal, “proceeds from ICOs could also be exempted from [sales tax].”
“While this proposal would improve Singapore’s competitiveness in its [sales tax] treatment of cryptocurrencies, Hong Kong, in comparison, is completely free of any sales tax so there is one less tax issue to be concerned about for cryptocurrency industry participants.”
Early last year, at the peak of the Asian ICO boom, Singapore was reportedly raking in some USD 270,000 per company from the dozens of South Korean companies rushing to issue tokens in what they considered to be an ICO-friendly territory.
But per the South China Morning Post, ICO issuances in Asian have since “dried up,” due to “stricter regulations and the failure of many projects to take off.”
Meanwhile, in the U.S., Ripple executives urged local lawmakers to support crypto regulation that does not disadvantage U.S. companies and does not paint crypto assets with “a broad brush.”
Elsewhere, the Australian Treasury suggested to exempt digital currency from new proposed restrictions on cash payments.
According to a draft, The Currency (Restrictions of the Use of Cash) Act 2019 establishes the cash payment limit of AUD 10,000 (USD 6,900) and makes it an offense to make or accept a payment or series of connected payments in cash in excess of this limit, the Treasury explained.
Meanwhile, among the payments that are not subject to the proposed limit are “payments that only exceed the cash payment limit because payment is or includes an amount of digital currency.”