Administrative Concessions and the Efficient Taxation of Digital Tokens in Singapore

(2023) 39(2) Banking & Finance Law Review 219-237

Posted: 30 Mar 2023 Last revised: 3 Jun 2023

See all articles by Vincent Ooi

Vincent Ooi

Singapore Management University - Yong Pung How School of Law; Singapore Management University - Centre for AI & Data Governance

Date Written: September 1, 2022

Abstract

Tax authorities around the world have stepped-up enforcement activities on the taxation of digital tokens and begun providing more guidance to taxpayers. However, the relative novelty of the field means that there is likely to be considerable uncertainty as to the correct tax treatment, both on the part of taxpayers and tax authorities. This requires both parties to seek tax and legal advice that is often duplicative (in the sense that similar issues tend to keep coming up for different taxpayers) and bear the risk of taking an incorrect legal position. In some cases, the strict tax position under the law might be complex and costly to apply, even though the revenue-raising potential might be limited. To insist on applying the strict tax position might thus result in disproportionate administrative costs, relative to the amount of revenue actually collected. This article suggests that tax authorities should consider the overall efficiency of revenue collection when releasing guidance for taxpayers, rather than blindly chase down every last tax dollar. The article uses Singapore as a case study, analysing how the e-Tax guides published by the Singapore tax authority manage to simplify complex legal concepts into an easily-accessible form for taxpayers. In some cases, the Singapore tax authority has adopted positions that are more generous to the taxpayer than under the strict legal position, which has potentially saved all parties from disproportionate compliance costs. The article suggests a few other areas in which more guidance might be provided by the tax authorities. Finally, the article notes that the guidance need not be static and can be adjusted as technology develops and commercial realities shift.

Keywords: digital tokens, cryptocurrencies, taxation law, revenue law, tax administration

JEL Classification: K34, F38, H2, H20, H24, H25, H26, H27, H29

Suggested Citation

Ooi, Vincent, Administrative Concessions and the Efficient Taxation of Digital Tokens in Singapore (September 1, 2022). (2023) 39(2) Banking & Finance Law Review 219-237, Available at SSRN: https://ssrn.com/abstract=4395526

Vincent Ooi (Contact Author)

Singapore Management University - Yong Pung How School of Law ( email )

55 Armenian Street
Singapore, 179943
Singapore

HOME PAGE: http://vincentooi.com

Singapore Management University - Centre for AI & Data Governance ( email )

55 Armenian Street
Singapore
Singapore

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