The Singapore tax authorities have recently issued guidance that the virtual digital currency, Bitcoin, is subject to Singapore goods and services tax (GST) at 7%. Although some financial services are exempt from VAT Bitcoin is regarded as a service that is not an exempt financial service.
Only businesses resident in Singapore will be liable to any taxes on Bitcoins. This means supplies to non-resident businesses will be exempt from GST. Singapore will subject the differences on the purchase and sale on Bitcoin currency by dealers to income tax. Long term investments in Bitcoin will be exempt. Payments in Bitcoins are liable to Singapore GST, effectively treating it as a barter arrangement. This would mean potential double taxation as GST would be due from the seller of the goods, and from the customer if both are GST registered. The provision of trading platforms will be subject to GST on the commission earned. The purchase of digital goods will remain exempt. GST will also apply where Bitcoins are converted into ‘real’ currency.
