Singapore levies Goods & Services Tax GST on Bitcoin

Fri 10th Jan 2014

The Singapore tax authorities have issued guidance this week that the virtual digital currency, Bitcoin, is subject to Singapore GST at 7%.

Bitcoin a service not an exempt financial service

It has clarified the following treatments:

  • Only business resident in Singapore will be liable to any taxes on Bitcoins.  This means supplies to non-resident business will be exempt from GST.
  • It will tax (income tax) the differences on the purchase and sale on Bitcoin currency by dealers.
  • 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 liable of the seller of the goods, and the customer paying in GST if both GST registered.
  • Providing trading platforms will incur GST on the commission earned.
  • The purchase on digital goods will remain exempt.  GST will also apply where Bitcoins are converted into ‘real’ currency.

Bitcoin not ‘money’ so not GST or VAT exempt

Generally, the provision of money and related services is considered a financial service and so exempt for Singapore GST.  It is the same treatment in most other countries that apply VAT and GST regimes.  These new guidelines mean that the tax authorities do not consider Bitcoin a currency, but a service.

Bitcoin is on online currency, without a central bank to control its creation.  It is held on open-source voluntar computer networks which retain the authentication and payments of the currency – which supports its value for transactions in the ‘real’ word.  Whilst is not blocked by most governments, the Chinese state placed an embargo on its use for payments last month.  A number of the Scandinavian countries, including Sweden and Norway are also leving VAT at 25% on bitcoin use.