Singapore's tax authority IRAS is gearing up to introduce tax treatment of virtual currencies like Bitcoin under its framework.
The Singapore taxation authority will treat this form of digital currency as a barter product rather than legitimate currency.
Ever since witnessing the increasing interest for digital currency among the entrepreneurs and merchants, the Singapore taxation authority has issued a tax advisory for Bitcoin. With the release of tax treatment of Bitcoin transaction, IRAS has announced, "All Singapore incorporated companies who exchange or buy and sell Bitcoin for other goods and services must pay taxes for these transactions. Nevertheless, if these forms of digital currencies are used as an investment option for long term, then the gains made on such investments would be exempted of tax under the law of absence of capital gains from taxation Singapore."
IRAS has emphasized that for overseas companies that are not registered in Singapore, their act of supplying Bitcoin shall be treated as being foreign sourced income, and therefore does not fall under the GST.
Since the Singapore tax authority considered Bitcoin as barter product, the payment made for buying goods and services through Bitcoin are deemed as barter exchange. In such a case, both parties are liable to pay goods and services tax Singapore. Furthermore, selling of Bitcoin is regarded as services and thus, GST Singapore applies to it.
Singapore is one of the five nations in the world to have issued such tax advisory for Bitcoin. Some of the other countries are being Germany, Norway, and the United Kingdom. In fact, the country is all set to get its first Bitcoin ATM on the month of March 2014.
Created as open software, Bitcoin is the world's first decentralized digital currency. It was introduced in 2009 by pseudonymous developer Satoshi Nakamoto. Bitcoin is also widely regarded as cryptocurrency since it uses 'Cryptography' for the creation and transfer of money.
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