Singapore Will Not Tax Airdrops or Hard Forks
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20 April
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The Inland Revenue Authority of Singapore (IRAS) released on Friday its new electronic tax guide to regulate the crypto industry. This new guide establishes a specific regulation for 3 different types of crypto currencies:

  • Payment tokens, used for goods and services.
  • Utility tokens, that represent a right to goods and services.
  • Security tokens or digital values.

This new guide, aimed at consumers and companies as well as ICO issuers, describes how the industry should be regulated.

In addition, it also sets out a series of guidelines in relation to other procedures such as hard forks and airdrops. Thus, according to the guide, cryptocurrencies from hard forks and airdrops will not be subject to any tax.

The IRAS' guide considers payment tokens like Bitcoin as "intangible goods" rather than legal tender. As a result, if a consumer pays for something with Bitcoin, he or she is participating in a "barter trade" where goods and services are taxed.

However, the issue becomes more complicated when determining the tax burden of a good or service whose value is originally represented in cryptocurrencies. A contractor who agrees to do a work for 3 BTCs cannot calculate the tax because the IRAS simply has no "methodology to value payment tokens."

Thus, IRAS has said taxpayers must determine a "reasonable and verifiable" rate from popular services such as Coinbase and Binance.

As far as transactions with utility tokens are concerned, they will unlikely be taxed. In fact, the use of utility tokens will actually be a deductible event under this new guidance.

On the other hand, security tokens are only taxable when they are classified as "revenue assets."

With respect to ICOs, security token issuers will not have to pay taxes, while utility token issuers will have to pay taxes as they are considered deferred revenue.

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