Virtual currencies used in virtual gaming worlds exempt, Singapore Authority
Great news, “Virtual currencies used in virtual gaming worlds, however, are exempted from the tax.” Anyone who wants to try and sell their virtual gaming world assets, items, property or services for virtual currency would be exempt! For the purposes of Singapore anyway 😛 Anyone wants to try and test out the imaginary markets forum? trading is the second board
(also updated with venturebeat)
An interest in or right over does sound proprietary to me, as opposed to a service service supply per se. Perhaps this will be clarified in the future.
Added excerpt from IBT: However, if there are no real world goods or services, like paying for virtual clothing for your World of Warcraft avatar with bitcoins, then the transaction is not taxable.
The IRAS has given a clear and concise set of guidelines for bitcoin taxation. It breaks down like this: If you make money through transactions, like selling goods for bitcoins, they are taxable as income tax. If you make money through investments, otherwise known as capital gains, they are taxable at the current zero percent rate. (Singapore is very investor-friendly.) Bitcoins are also taxable in a second way, as a GST. Basically a GST means that if the transaction involves real money or services it is taxable (i.e. buying and selling bitcoins with dollars, or paying for services with bitcoins). However, if there are no real world goods or services, like paying for virtual clothing for your World of Warcraft avatar with bitcoins, then the transaction is not taxable. You can find a full list of the rules the IRAS has set out here.
Singapore Taxes Bitcoin: How New Taxation May Be Exactly What Bitcoin Needs
The Article from Techinasia
(oh ya techinasia, you guys made a typo, finanacial instead of financial, finanasia has a ring to it tho)
- January 8, 2014
- at 5:12 pm
- by Terence Lee
Singapore government to tax some bitcoin transactions
Singapore-registered companies who buy and sell bitcoins or exchange the digital currency for other goods and services must pay taxes for these transactions, says the Inland Revenue Authority of Singapore (IRAS), Singapore’s tax authority.
The government’s stance towards the volatile cryptocurrency, which once again soared above $1,000 in price, echoes countries like Germany, Norway, and the United Kingdom, all of which deemed Bitcoin taxable.
In a series of emails sent to Singapore-based Bitcoin brokering service Coin Republic, which sought clarifications on the government’s position towards bitcoin taxation, IRAS laid out exactly which kind of transactions are subjected to taxes.
Companies that buy or sell bitcoins will have to declare taxes based on gains from their sale of the currency. However, if the company invests in Bitcoin for the long-term, all gains will be capital in nature and therefore not taxable. Singapore currently has no capital gains tax.
Bitcoin considered goods, not currency
With regards to the Goods and Services Tax (GST) – pegged at seven percent – IRAS says that the sale and exchange of bitcoins “in return for a consideration in money or in kind is a taxable supply of services subject to GST”.
In cases where bitcoins are accepted as payments for goods or services, these transactions are treated as barter exchanges because Bitcoin is not considered money or currency by the government. As such, the GST could apply to both bitcoins and the goods and services being exchanged. Virtual currencies used in virtual gaming worlds, however, are exempted from the tax.
Finally, the amount of GST levied on companies depends on whether they act as an “agent” or “principal” in the transaction. So if the firm deals with bitcoin on behalf of others – which is the case for bitcoin exchanges that transfer the currency to a customer’s wallet – then GST is only chargeable on the business’ commission fees.
But if a company is acting as a principal, in other words buying and selling bitcoin directly to customers, then the tax applies to the full amount received plus commission fees.
IRAS has emphasized that for companies that are not registered in Singapore, their act of supplying bitcoins shall be treated as being made outside the country, and therefore does not fall under the GST.
Praise for stance
David Moskowitz, founder of Coin Republic, has called the guidance by IRAS “rational and well thought out”. He adds:
As a business owner I can clearly account for my earnings on Bitcoin trades for my clients and my own positions and pay the proper taxes.
Coin Republic has been seeking clarifications from a number of government bodies with regards to their stance towards the currency.
Previously, it heard from the Monetary Authority of Singapore, the country’s central bank, that it will not intervene in whether or not Singapore-based businesses accept bitcoin in exchange for goods and services.
Singapore is one of the world’s top finanacial hubs that could challenge Switzerland’s for the private banking crown.
The country also saw its inaugural Bitcoin conference last year. A vocal community, spearheaded by expats, has been eagerly promoting the currency to the public and engaging with government officials about its merits.
(Editing by Paul Bischoff, image credit: Jason Benjamin)
Bitcoin regulation, here we come: Singapore clarifies tax policies
January 10, 2014 6:00 AM
Singapore is providing some clear guidance on how merchants can manage taxation on Bitcoin transactions.
This is a step ahead of most governments, which have yet to issue clear regulations around the new alternative payment. Even many financial corporations have held it at arm’s length: PayPal president David Marcus recently found himself in a small firestorm of controversy when he said that people are mistaken for thinking Bitcoin is a currency.
CoinRepublic, a Singapore-based news site and brokering service, originally reported the news after it received a copy of an email sent to The Inland Revenue Authority of Singapore (IRAS). The Singapore government is reportedly offering guidance on how merchants can handle capital gains, earnings, and even sales tax (also known as a goods and services tax, or GST) on Bitcoin exchanges and Bitcoin-related sales.
CoinRepublic founder David Moskowitz believes the guidance is a step in the right direction. He said: “The guidance which IRAS laid out is rational and well thought out. As a business owner I can clearly account for my earnings on Bitcoin trades for my clients and my own positions and pay the proper taxes.”
Most interesting is that Bitcoin will not be considered a “currency” or a form of “money” under the GST Act — so in that respect, Singapore agrees with Paypal’s Marcus. Instead, the government considers it a “supply of services” as “it involves the granting of the interest in or right over the Bitcoins.”
“If the seller is a GST-registered person, he would have to account for output tax on the sale of Bitcoins made in the course or furtherance of his business,” the letter reads.
Here’s a summary of that email from IRAS:
Income Tax Treatment
“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.”
“The sale (including the exchange) of bitcoins in return for a consideration in money or in kind is a taxable supply of services subject to GST. If the seller is a GST-registered person, he would have to account for output tax on the sale of bitcoins made in the course or furtherance of his business. “
“Where bitcoins are accepted as payment for real goods or services (e.g. digitized items like online music), such transactions are treated as a barter exchange. GST should be accounted for on the individual supplies made (i.e. the supply of bitcoins and the supply of real goods or services) if the parties involved are GST-registered persons. However if the bitcoins are used to exchange for virtual goods or services within the virtual gaming world, as a concession, the supply of bitcoins will not be taxed until the bitcoins are exchanged for real monies, goods or services.”
“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.”
“The GST treatment of the supply of bitcoins will depend on whether the company is acting as an agent or principal in the transaction. If the company merely facilitates and is acting as an agent in the bitcoin trade (e.g. 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 (e.g. buys and onward sells bitcoins to the customer), GST is chargeable on the full amount received, i.e. the sale of bitcoins and commission fees. “
“Under section 13(4) of the GST Act, a supply of services shall be treated as made in another country if the supplier belongs in that other country. In this case, if the company belongs outside Singapore (i.e. there is no business or fixed establishment in Singapore), the supply of bitcoins shall be treated as made outside Singapore. Accordingly, GST is not chargeable on the supply of services (i.e. bitcoins) made outside Singapore. “
“Overall, the GST treatment of bitcoins will depend on the business arrangement and contractual terms between the parties involved.”