By Natalie Lord
The uptake of cryptocurrency, and reactions to it, across the globe have varied considerably. Many governments view it as a threat, and as a consequence we’ve seen countless lawsuits filed and a spectrum of regulatory frameworks imposed. In some countries, the use or trading of cryptocurrencies has been banned, in others it’s been heavily controlled or closely monitored.
There are a few countries, however, that have been more open in their thinking and considered how the cryptocurrency industry might be of benefit. Singapore is one such place. It has implemented regulations to guide the way cryptocurrencies and digital exchanges can operate in the country, alongside anti-money laundering and counter-terrorism structures. Once corporations have adhered to these formalities they can operate legally. Simply put, there are regulations, but there is clarity in these regulations and an open and free space once those have been cleared. It’s a straightforward methodology.
Earlier this year, the Singapore government went one step further in making it an attractive proposition to base for the crypto industry: it waived sales tax on digital payment tokens. This increases the benefits of cryptocurrency investments for both companies and individuals and puts Singapore on the map alongside the wealthy Canton of Zug in Switzerland, in terms of it being recognised as a serious hub for blockchain and crypto.
On November 4, the second minister of Finance, Lawrence Wong, outlined changes to its goods and services (GST) regulations in Parliament. He detailed additional provisions to a new bill that will enhance its current GST regulations during the second reading of the Goods and Services Tax (Amendment) Bill 2019. The updated legislation will impact imported services, as well as provide clarity around new rules that will be added for virtual currencies.
According to Mr Wong, the reforms will be applied to imported services related to business-to-business transactions and will specifically address the Overseas Vendor Registration Act, and will include allowing GST group members to register to become overseas suppliers. The amendments are expected to take effect from January 1 2020.
The first part of the reforms focus on enabling local electronic marketplace operators to account for business-to-business and business-to-consumer suppliers. It will further clarify what the scope of the GST reverse charge is. It will apply to all businesses that are required to register with the GST or to those who are liable for registration with the governmental authority.
But what is of interest for the cryptocurrency industry is what is contained in the latter part of the amendment, because these will change how the GST impacts digital payment tokens.
Next week we look in detail at what the amendments will mean for cryptocurrency investors in Singapore and how its legislative move compares with what is happening in the Swiss Canton of Zug, which has been dubbed as “Crypto Valley”.