Singapore Finance Minister Lawrence Wong has said that Singapore’s current income tax rules will apply to transactions involving non-fungible tokens (NFTs). The tax rules will depend on the nature and use of the NFTs.
Individuals who rely on NFT trading or transactions as a source of income will pay income tax. However, they shall not be subject to capital gains tax since Singapore does not have such a regime. Countries like the United States are some of the countries that are known to charge both income and capital gains tax on cryptocurrency and NFTs trading.
Singapore has some of the lowest tax rates in Asia
Singapore’s maximum tax rate goes up to 22% for the highest-earning individuals and by comparison, Indonesia has a maximum tax rate of 45% and the Philippines has a maximum tax rate of 35%.
Despite the fact that Singapore intends to raise taxes in its 2022 budget, the fact that it doesn’t charge income gains tax makes it a tax haven for high-earning individuals. This also makes it a tax haven for crypto investors and traders.
Singapore crypto haven
Besides low taxes, Singapore also has one of the most conducive environments for blockchain and cryptocurrencies in terms of governing laws. This makes it a hotbed for crypto startups.
Although the island state does not recognize any of the digital currencies as legal tender, individuals and institutions are allowed to use the digital currencies in a regulated manner including trading. The Monetary Authority of Singapore has set in place strict laws that protect crypto investors in the country.
Last year, when China unleashed a crypto crackdown in the country, it pushed a bulk of exchanges and firms that operated in China into Singapore as they fled the wrath of the Chinese government. Huobi, for example, which was once the largest crypto exchange in China, has since picked Singapore as its regional headquarters.
There has been an accelerated crypto adoption in Singapore over the past few years. According to Statista, about 16% of Singapore’s population holds cryptocurrencies.