Making Money From Cryptocurrency- The Taxman May Call On You
The Straits Times, 20 November 2021
2 Pages Posted: 15 Mar 2022 Last revised: 23 May 2023
Date Written: November 20, 2021
The range of potential investment opportunities in Singapore involving cryptocurrency continues to grow over time as these asset classes gradually gain mainstream acceptance. While there are risks involved in such investments and investors should certainly do their homework before blindly jumping on the bandwagon, for those lucky enough to have their investments pay off, the question arises as to whether a portion of those gains has to be shared with the tax authorities.
Thus far in Singapore, the Inland Revenue Authority of Singapore ('the IRAS') has issued two e-Tax Guides on cryptocurrency, with one focusing on income tax and the other on goods and services tax. They provide an excellent introduction to the basic tax issues which cryptocurrency investors should be aware of. Moving forward, as cryptocurrency become even more firmly entrenched in the local investment space, investors might well expect the IRAS to become more interested in exploring the revenue options in this area, as many overseas tax authorities have already done.
As a starting point, investors should understand that there is nothing 'magical' about cryptocurrency that takes it out of the tax system. Quite often essentially the same tax provisions apply to transactions involving cryptocurrency as they apply to any other kind of asset. Thus, if investments in cryptocurrency generate returns, one will have to consider whether these returns might be taxable. There are quite a few ways in which one might secure some returns from these investments, which we will cover in turn.
Keywords: Taxation, taxation law, tax law, cryptocurrencies, digital tokens
JEL Classification: K34, F38, H2, H20, H24, H25, H26, H27, H29
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