Taxation of Cryptocurrencies for Individuals in Singapore

Income Tax

Purchasing Cryptocurrencies

The purchase of cryptocurrencies will not trigger a taxable event in Singapore. However, the intention at the point of purchase would be considered to determine the tax treatment of gains/losses from the subsequent disposal of the cryptocurrencies.

Disposal of Cryptocurrencies

An individual may dispose cryptocurrencies to exchange them for fiat currencies and other cryptocurrencies or pay for goods and services. Any resulting gains or losses from the disposal of the cryptocurrencies will taxed or allowed as deduction if the individual engages in the buying and selling or cryptocurrencies in the ordinary course of business or trade. Otherwise, the resulting gains or losses from the disposal of cryptocurrencies are generally not taxable or allowed as deduction if the cryptocurrencies are not held for trading purpose (e.g. held as personal investments).  

Whether any gains or losses are derived in the ordinary course of business or trade will depend on the facts and circumstances of each case. Factors such as purpose, frequency of transactions, and holding periods are usually considered.

Receiving Cryptocurrencies

An individual may receive cryptocurrencies from the provision of services (including employment services and any other form of services) or from the sale of goods. The cryptocurrencies received by the individual will be taxable in the hands of the individual based on the value of the services performed by the individual or the value of the goods sold by the individual.

An individual may also receive cryptocurrencies from mining activities. Generally, an individual engaging in mining activities will be considered as undertaking the activity as a hobby. Gains from sale of the mined cryptocurrencies are treated as capital gains and are not taxable. Mining expenses will not be deductible. However, if an individual shows a habitual and systematic effort to make a profit from the activities, he may be considered as carrying on a vocation of a miner and his profits from the sale of the mined cryptocurrencies will be subject to tax.

Capital Gains

Singapore does not have a capital gain tax regime and any capital gains derived are not taxable to an individual. What constitute capital gains are discussed above under “Income Tax”.

Goods and Services Tax (“GST”)

GST is not chargeable on any supply made by an individual in his personal capacity. However, an individual who supplies cryptocurrencies (such as selling them on cryptocurrency exchange or use the cryptocurrencies to pay for goods or services) in the course or furtherance of a business may be required to register and charge GST on the supply of cryptocurrencies.

Notwithstanding the above, cryptocurrencies that qualify as “digital payment tokens” are exempt from GST if they are exchanged for fiat currency or other digital payment tokens. “Digital payment tokens” are those that have certain prescribed characteristics by the Inland Revenue Authority of Singapore. Examples of digital payment tokens are Bitcoins, Ether, Litecoin, Dash, Monero, Ripple and Zcash. The use of digital payment tokens to pay for anything (other than for fiat currency or other digital payment tokens) is not a supply for GST purpose.