Singapore will not tax forks and giveaways

The Singapore Inland Revenue Authority will not levy taxes on freely distributed crypto assets and coins.resulting from forks. Other crypto assets are still taxable.

New Office of Management InternalSingapore Revenue (IRAS) has filled tax reporting gaps related to digital tokens: payment tokens, tool tokens and stock tokens. Each type of token now has a new definition and corresponding tax regime from IRAS.

This manual is intended for bothconsumers and enterprises, and for issuers of ICOs, and describes a fragmented approach for the industry. The tax guide explains the procedures for various situations related to crypto assets. For example, IRAS will not levy income tax on payment tokens received by the user as part of the free distribution, as well as on coins that appear as a result of a blockchain fork.

In the IRAS manual, payment tokens, for example,Bitcoin is recognized as “intangible property” and not legal tender. If a consumer pays in BTC, he engages in “barter trading,” in which goods and services are taxed, not the payment token itself.

The situation is complicated when determinedthe tax burden of a product or service originally valued in cryptocurrency. For example, a contractor who agrees to do the work for 3 BTC cannot accurately calculate the tax because IRAS does not have a “methodology for evaluating payment tokens." Therefore, the IRAS obliges taxpayers to independently determine the “reasonable and verifiable” exchange rate using large trading platforms, such as Coinbase and Binance.

Instrument token operations, in contrast,It is unlikely that they will trigger a taxable event for the user. Their acquisition as a right to future services will be considered as an advance payment. The use of payment tokens will be considered a deductible event from the tax base.

Stock tokens are considered in accordance withthe same tax laws that apply to other securities. Singapore does not levy capital gains tax on any securities and tax dividends depending on the issuer. Thus, stock tokens are taxed only when they are classified as a “returnable asset”.

Singapore taxation scheme leavesICO (STO) issuers of token-shares the full amount of funds raised. However, instrument tokens issued as part of the ICO are treated differently. Such revenue actually represents future income that is taxed immediately after the delivery of the goods. Issuers of payment tokens must pay tax immediately, although the manual says that such schemes are “unusual”. IRAS notes:

"For payment tokens issued as part of the ICO, a more detailed study of the situation may be required."

Recall that last summer, the Singapore tax agency proposed to exempt from the tax on goods and services operations with cryptocurrencies, which are intended to act as a medium of exchange.

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