Non-fungible tokens, or NFTs, would be taxed under Singapore’s current income tax regulations, said Finance Minister Lawrence Wong in Parliament on Friday (Mar 11).
Wong noted that the income tax treatment “would be assessed based on the type and use of the NFT” in a legislative reply to Yio Chu Kang SMC Member of Parliament Yip Hon Weng.
Individuals who earn money from NFT transactions or trading in NFTs will be affected, he stressed.
However, he also noted that individuals may also derive capital gains from NFT transactions.
“As Singapore does not have a capital gains tax regime, such gains will not be taxable,” said Wong.
Taxes have already been applied to NFT transactions, or to virtual currency, in countries such as Australia and the US.
But capital gains on NFTs will not be taxed, given that the country has no such regime. The United States, which has among the largest number of crypto holders in the world, levies both income tax and capital gains tax on crypto and NFT trading.
Singapore has some of the lowest income tax rates in Asia, with the maximum rate going up to 22% for high earners. By comparison, Indonesia has a maximum rate of 45%, while Philippines is 35%.
While the island state’s 2022 budget intends to raise taxes for high earners, its lack of a a capital gains tax makes it a haven for many high-value individuals.
Singapore the crypto haven
The island state also boasts among of the world’s most lenient cryptocurrency legislation, making it a hub for cryptocurrency entrepreneurs. Although digital currencies are not recognized as legal cash, they are permitted to be traded in a regulated environment. Singapore’s Monetary Authority has likewise enacted tough regulations to protect cryptocurrency investors.
Following China’s crypto crackdown last year, the majority of the country’s exchanges and businesses relocated to Singapore. Following the crackdown, Huobi, once China’s largest crypto exchange, chose Singapore as its regional headquarters.
Crypto usage has also increased in the country as a result of this. According to Statista, roughly 15.8% of the country’s population owns cryptocurrency, compared to 15.5 percent globally.
Piyush Gupta, the CEO of Singapore’s largest bank, DBS, believes that crypto will increase in importance as a store of value, but that it will not replace conventional currency anytime soon.
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