Singapore Issues Bitcoin Tax Guidance (Jan. 9, 2014)
Another day, another government weighing in on the ongoing Bitcoin brouhaha. But unlike some nations that have announced restrictions and warnings on Bitcoin usage, regulators in Singapore have taken a more accommodating position toward the digital currency—or at least to its tax revenue potential. The Inland Revenue Authority of Singapore (IRAS) has given guidance for how to handle capital gains, earnings and sales tax on Bitcoin transactions. The guidance came in the form of an email sent by IRAS to Singapore-based Bitcoin brokerage Coin Republic, which characterized the guidelines as “rational and well thought-out.”
As per Coin Republic, under IRAS guidance companies in the business of buying and selling bitcoins will be taxed on the gains from such transactions. However, long-term investments made in bitcoins will be considered capital gains, and thus not taxable. Sales of physical goods in exchange for bitcoins are subject to general sales tax, but sales of virtual goods are not taxed. And IRAS said in its guidance that it does not deem Bitcoin to fit the definition of “money” or “currency”—unlike in the U.S., where last year’s decision by a federal judge to consider Bitcoin a form of currency could require Bitcoin exchanges to apply for money transmitter licenses.
While Bitcoin has drawn scrutiny from regulators and governments around the world, the currency has enjoyed a warmer reception from the business sector. Earlier this week, news that popular social game maker Zynga would begin accepting Bitcoin for in-game payments boosted the value of a single bitcoin above $1,000.