In the last few months, Bitcoin has seen a number of set backs with many governments clamping down on the virtual currency. But Singapore has taken a different position, not only recognizing Bitcoin but defining tax rules to govern its use in the country.
This is great news for the Bitcoin community and goes a long way to legitimize the virtual currency. Although many countries such as India, China, North Korea and Norway have either opposed the virtual currency or forced the closing of its local exchanges, Singapore’s move may significantly bolster support for Bitcoin.
Not only has the Singapore government formally recognized Bitcoin but it has also laid down tax rules to govern the currency’s use within the country. For instance, if Bitcoin are being sold or bought by a company based in Singapore, the transaction will be taxed. But if the company has defined the use of Bitcoins as part of a long-term investment, that won’t be deemed tax-worthy.
Similarly, if Bitcoin are exchanged for cash or actual goods, the transaction will again be taxed. In other words, if you use Bitcoin to purchase stuff off an online marketplace, it will likely be taxed if the buyer and the seller are based in Singapore. This, however, does not extend to purely virtual goods such as in-app purchases.
Bitcoin exchanges will also be taxed on the basis of the commission they take while transferring the digital currency. A great thing about these new tax rules defined by Singapore is that ‘a supply of services shall be treated as made in another country if the supplier belongs in that other country.’ So if you are based in Singapore but use Bitcoin to buy stuff from an overseas company, the government won’t be taxing it.
This is certainly a bold move by Singapore and will help set the precedent for other governments which, for now, are shying away from the new currency.
Source: Coin Republic