According to a recent report, the Inland Revenue Authority of Singapore (IRAS) revealed the draft for a new crypto law. known as the e-Tax guide, the proposal will apparently exempt some cryptocurrencies from the VAT or Value Added Taxes system.
If accepted, The new law will be enforced as early as January 2020, and thereby take over the current solution in place. In the current system, the supply of digital payment cryptos is treated as a taxable supply service.
Thanks to this newly revealed proposal, the country Singapore is set to join a considerable list of nations who have taken similar measures.
The IRAS believes that digital tokens that are intended as a medium of exchange have been used as a barter trade resulting in two distinct and separate token supplies ( more specifically a taxable token supply and a supply of the relevant goods and services).
As stated in the proposed document:
The use of digital payment tokens as payment for goods or services will not give rise to a supply of those tokens, and (ii) The exchange of digital payment tokens for fiat currency or other digital payment tokens will be exempt from GST.
Among the targeted cryptocurrencies, the IRAS included household names such Bitcoin and Ether, additionally, Dash, Litecoin, Monero, and Ripple XRP will be subjected to this exemption, as they abide by the legal definition of digital currencies functioning as a medium of exchange.
However, Singaporean authorities and the IRAS will not include fiat-pegged currencies from the proposed exemption. These type of currencies will still be taxed under the Good and Services Tax (GST) guidelines.
As for crypto mining, the IRAS specified that the new guidelines will not interfere with token reward made from crypto mining.
There is generally no sufficiently close nexus between the service provided by the miner to the persons whose transactions are verified and the mined tokens that the miner received from the blockchain ecosystem. The parties paying the mined tokens are also not identifiable.