Singapore Crypto Tax Guide 2024

Author: Chan Wei Xiang, Core Contributor at Launch Factor

Overview

1. Capital Gains from the disposal of digital payment tokens (Include BTC and ETH) by Web3 Businesses and Individuals are not subject to capital gain tax in Singapore as there is no capital gain tax in Singapore.

2. Whether gains from the disposal of digital tokens are trading or capital gains depends on the facts and circumstances of each case. Factors such as purpose, frequency of transactions, and holding periods are considered when determining if such gains are taxable.

With 20 licensed holders and over 50 applicants in progress, Singapore continues to be a key financial center supporting the crypto industry’s growth. The Monetary Authority of Singapore (MAS) has established guidelines to ensure a safe and conducive environment for this sector, including regulations for stablecoins. This supportive regulatory framework has positioned Singapore as a leading hub for crypto startups and innovation. In 2024, the approval of a $2 billion top-up for the financial sector development fund further demonstrates the government’s commitment to the financial services industry.

Content

• What is a digital payment token in Singapore?
• What are the tax incentives provided by the government 

this year for Web3 Businesses and Individuals?

• What are the crypto tax rates in Singapore?
• How is crypto taxed in Singapore?
• When is the deadline for crypto taxes in Singapore?
• Should Web3 Businesses register for GST in Singapore?
• How about withholding tax and stamp duty?

What is a digital payment token in Singapore?

TL;DR: BTC / ETH and others

A digital payment token is a digital token that has the following characteristics: 

(a) it is expressed as a unit; 

(b) it is designed to be fungible; 

(c) it is not denominated in any currency, and is not pegged by its issuer to any currency; 

(d) it can be transferred, stored or traded electronically; and 

(e) it is, or is intended to be, a medium of exchange accepted by the public, without any substantial restrictions on its uses as consideration. 

but does not include: 

(f) money; 

(g) anything which, if supplied, would be an exempt supply under Part I of Fourth Schedule to the GST Act for a reason other than being a supply of a digital token(s) having the characteristics of (a) to (d); 

(h) anything which gives an entitlement to receive or to direct the supply of goods or services from a specific person or persons and ceases to function as a medium of exchange after the entitlement has been used. 

What are the tax incentives provided by the government this year for Web3 Businesses and Individuals?

Budget 2024 – Impact on Web3 Businesses 

1. To help companies manage rising costs, a CIT Rebate of 50% of tax payable will be granted for YA 2024. The maximum total benefits of CIT Rebate and CIT Rebate Cash Grant that a company may receive is $40,000.
2. Introduce an additional concessionary tax rate (“CTR”) tier of 10% for the Finance and Treasury Centre (“FTC”) incentive
3. Introduce an additional CTR tier of 15% for the Intellectual Property Development Incentive (“IDI”)

Budget 2024 – Impact on Web3 Individuals

1. In view of cost-of-living concerns, a PIT Rebate of 50% of tax payable will be granted to all tax resident individuals for YA 2024. The rebate will be capped at $200 per taxpayer.
2. Raise dependant’s or caregiver’s income threshold for dependant related reliefs to $8,000

What are the crypto tax rates in Singapore?

Web3 Individuals

Income tax rates depend on an individual’s tax residency status. You will be treated as a tax resident for a particular Year of Assessment (YA) if you are a:

1. Singapore Citizen or Singapore Permanent Resident who resides in Singapore except for temporary absences; or

2. Foreigner who has stayed/worked in Singapore:

a. For at least 183 days in the previous calendar year; or

b. Continuously for 3 consecutive years, even if the period of stay in Singapore may be less than 183 days in the first year and/or third year; or

3. Foreigner who has worked in Singapore for a continuous period straddling 2 calendar years and the total period of stay is at least 183 days*. This applies to employees who entered Singapore but excludes directors of a company, public entertainers, or professionals. 

*including your physical presence immediately before and after your employment

If you do not meet the conditions stated above, you will be treated as a non-resident of Singapore for tax purposes.

Resident tax rates

Chargeable Income	Income Tax Rate (%)	Gross Tax Payable ($)
First $20,000Next $10,000	02	0200
First $30,000Next $10,000	-3.50	200350
First $40,000Next $40,000	-7	5502,800
First $80,000Next $40,000	-11.5	3,3504,600
First $120,000Next $40,000	-15	7,9506,000
First $160,000Next $40,000	-18	13,950 7,200
First $200,000Next $40,000	-19	21,1507,600
First $240,000Next $40,000	-19.5	28,7507,800
First $280,000Next $40,000	-20	36,5508,000
First $320,000Next $180,000	-22	44,55039,600
First $500,000Next $500,000	-23	84,150115,000
First $1,000,000In excess of $1,000,000	-24	199,150

Web3 Businesses

Your company is taxed at a flat rate of 17% of its chargeable income. This applies to both local and foreign companies. Foreign income refers to income derived from outside Singapore. Generally, such income is taxable in Singapore when remitted to and received in Singapore. Where the foreign income arises from a trade or business carried on in Singapore, it is taxable in Singapore upon accrual, regardless of whether it is received in Singapore.

Where a gain from a transaction involving payment token is subject to tax, the issue of source of the income could arise. IRAS will consider the whole operation of the taxpayer’s trade or business when determining what the taxpayer has done to derive the income in question, and where those activities are performed. If the bulk of the business operations are performed in Singapore, then income derived from such activities would likely be regarded as sourced in Singapore and hence taxable in Singapore. However, there is no single factor that is conclusive. All facts should be considered holistically to determine if the activities that gave rise to the income are mainly carried on in Singapore. 

Some relevant factors to consider are: 

1.  Whether the company has any physical presence in Singapore (e.g. office, employees); and 
2. Whether the key activities (e.g. operating and maintaining a token exchange platform in Singapore) are carried out in Singapore.

The tax exemption scheme for new start-up companies was introduced in the Year of Assessment (YA) 2005 to support entrepreneurship and to grow local enterprises.

• 75% exemption on the first $100,000 of normal chargeable income*; and
• A further 50% exemption on the next $100,000 of normal chargeable income*.

How is crypto taxed in Singapore?

Businesses that choose to accept digital tokens such as Bitcoins for their remuneration or revenue are subject to normal income tax rules. They are taxed on the income derived from or received in Singapore. 

Tax deductions are allowed, where permissible, under SG tax laws.

Generally, these businesses should record the sale based on the open market value of the goods or services in Singapore dollars. The same applies for businesses which pay for goods or services using digital tokens.

If the open market value of the goods or services that would have otherwise been exchanged in Singapore dollars cannot be determined (e.g. the good or service is only traded with digital tokens), the digital token exchange rate at the point of the transaction may be used.

Currently, IRAS does not prescribe any methodology to value digital payment tokens. Taxpayers can use an exchange rate that best reflects the value of the tokens received, provided that the following two conditions are satisfied: 

1.  The exchange rate must be reasonable and verifiable e.g. it is determined using an average of exchange rates available on payment token exchanges, such as Coinbase and Binance. Where the exchange rate is not available on exchanges, taxpayers can use other means to support th2eir claim that the basis of the exchange rate used is reasonable. 

2.  The methodology used to determine the exchange rate should be consistently applied year on year.

Learn more about the tax treatment of digital tokens received as payment

Businesses that buy and sell digital tokens in the ordinary course of their business are taxed on the profit derived from trading in the digital token. In addition, profits derived by crypto mining businesses which mine and trade digital tokens in exchange for money are also subject to tax.

Businesses that buy digital tokens for long-term investment purposes may enjoy capital gains from the disposal of these digital tokens. However, as there are no capital gains taxes in Singapore, such gains are not subject to tax. For the definition of long-term, it is suggested to check with Launch Factor or other tax accountants.

Whether gains from the disposal of digital tokens are trading or capital gains depends on the facts and circumstances of each case. Factors such as purpose, frequency of transactions, and holding periods are considered when determining if such gains are taxable.

When is the deadline for crypto tax in Singapore?

Web3 Individuals

The deadline for filing taxes on cryptocurrency transactions in Singapore aligns with the general tax schedule that runs from January 1 to December 31. Taxpayers must report their taxable income, including any gains from cryptocurrency trading, by April 15 for paper filing and April 18 for e-filing.

Web3 businesses

Tax Return	Purpose	Due Date
ECI	To declare an estimate of the company’s taxable income for a Year of Assessment (YA)	Within 3 months from the end of the financial year, except for companies that qualify for the ECI filing waiver and those that are specifically not required to file an ECI
Form C-S/ Form C-S (Lite)/ Form C	To declare the company’s actual taxable income for a YA	30 Nov each year

Should Web3 Businesses register for GST in Singapore?

The use of digital payment tokens as payment for goods or services will no longer give rise to a supply of those tokens. That is, if you use digital payment tokens to pay for the purchase of goods or services, you need not account for GST on the use. A supply of digital payment tokens in exchange for fiat currency or other digital payment tokens, and the provision of any loan, advance or credit of digital payment tokens will be exempt from GST. Therefore, the supply of such tokens, being an exempt supply, will not contribute to your annual taxable turnover for the determination of your liability for GST registration. 

Compulsory

You must register for GST if your taxable turnover is:

1. Under the retrospective view, more than $1 million at the end of the calendar year, or
2. Under the prospective view, expected to be more than $1 million in the next 12 months  

Voluntary

One of the benefits of registering for GST is that you can claim the GST incurred on your purchases, subject to the conditions for claiming input tax. However, if you are a partially exempt business or an organisation with business and non-business activities, you will not be able to claim your input tax in full, as the input tax attributable to the making of exempt supplies, wholly non-business activities and activities with non-business elements are not claimable.

Under the reverse charge mechanism, the GST-registered recipient of the imported services or low-value goods, accounts for GST on those services or goods as if he were the supplier. Concurrently, he may claim the GST as his input tax subject to the normal input tax recovery rules.

Web3 businesses should consider voluntary registration of GST given the GST incurred on the purchase might be claimable even if the business is loss making.

How about withholding tax and stamp duty?

With the rise of security/ asset-backed/ RWA/ stablecoins tokens, relevant issuers or holders will need to be aware of withholding tax and stamp duty in Singapore. Generally stamp duty is payable on share transfer in Singapore and Web3 businesses must withhold tax when a payment of a specified nature has been made to non-resident companies/individuals.

The tax treatment of crypto assets in Singapore continues to evolve as the market matures, reach out to Launch Factor at [email protected] to find out more!
Contact: [email protected]

Check out the full Global Crypto Tax Report 2024