A tax expert from PwC Hong Kong has said that Singapore’s proposed plan to waive the 7% Goods and Services Tax (GST) for digital currencies would be a boon for businesses related to the cryptocurrency industry, according to a report by Cointelegraph.
Singapore’s Inland Revenue Authority revealed that it had been considering the GST exemption in July. If the law is approved, GST would be eliminated for cryptocurrencies from January 1st, 2020. The move would also mean major changes to token rules, as digital payment tokens are currently treated as a taxable supply of services.
The draft document proposed changes to taxation rules as follows:
“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.”
According to a July 29th report by the South China Morning Post, PwC Hong Kong Tax Partner Gwenda Ho stated that the proposed GST waiver for cryptocurrencies would benefit blockchain businesses, cryptocurrency exchanges, and other crypto-related businesses.
Nonetheless, she was quick to point out that Hong Kong businesses already benefit from the lack of sales tax in the special administrative region.
“While this proposal would improve Singapore’s competitiveness in its GST treatment on cryptocurrencies, Hong Kong in comparison is completely free of any sales tax so there is one less tax issue to be concerned about for cryptocurrency industry participants,” said Ho.
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