Minister of Finance Lawrence Wong In a press release on Friday, he stated that the current income tax rules in Singapore will apply to transactions that also involve non-tradable tokens (NFTs). However, this implementation will depend on the nature and use of NFT.
In particular, those who depend on NFT transactions or trade as a source of income will be subject to deductions, The Business Times reported. However, given the country’s crypto strategy, capital gains from NFTs will not be taxed. The United States, which has the largest number of cryptocurrency holders in the world, charges both income tax and capital gains tax on crypto and NFT trading.
Singapore, is also known as the country with the lowest income tax rates in Asia (varies by industry), with a maximum rate of up to 22% for high income earners. Compared to other Asian countries, Indonesia’s maximum rate is 45%, while the Philippines has 35%.
While the island state’s 2022 budget aims to increase taxes for high-income earners, the absence of capital gains taxes makes it a tax haven for many high-value individuals.
The island state also has some of the most favorable laws for cryptocurrencies in the world, making it a hotbed for crypto startups. Digital currencies are not accepted as legal means of payment as in our country, but they are allowed to be used in regulated trade. The Monetary Authority of Singapore also enforces strict laws to protect crypto investors.
China’s crypto crackdown last year resulted in the majority of the country’s stock exchanges and companies moving to Singapore. Huobi, once the largest crypto exchange in China, chose Singapore as its regional headquarters after the raid.
This also indicates that crypto adoption is accelerating in the country. According to Statista, about 15.8% of the country’s population owns crypto, compared to the global average of 15.5%.
Piyush Gupta, CEO of Singapore’s largest bank DBS, said that he expects crypto to grow as a meaningful store of value, but does not expect it to replace fiat currency anytime soon.