Tax considerations for transactions involving digital tokens

As digital tokens gain popularity in Singapore, it is important to be aware of the key tax considerations of digital tokens and their complexities.

Digital tokens have been gaining popularity on global trading platforms and increasingly companies raised funds through initial coin offerings in addition to traditional means such as IPOs and external borrowing. How are such transactions viewed from the tax perspective in Singapore?

Inland Revenue Authority of Singapore (IRAS) is of the view that if a person is trading in digital tokens and derived gains that are revenue in nature, such gains will be subject to income tax in Singapore. Conversely, if such gains are capital in nature, they are tax exempt in Singapore. The determination of whether a gain is revenue or capital in nature is based on an assessment of the “badges of trade”.

The general tax treatment of digital tokens in Singapore:

How can we help

Digital tokens are disrupting the financial sector and has catalysed the need for tax service providers to adapt in order to serve clients who operate in the cryptocurrency space.

Our global experts have extensive experience working with domestic and foreign financial institutions and offer clients industry-leading guidance. We can assess your preparedness to meet existing digital regulations and deal with increased compliance related to digital token assets.