The government of Singapore is adding provisions to a new bill that will enhance its goods and services tax (GST) regulations, Tax-News reported. The new legislation will specifically address imported services as well as clarify what new rules which will be added for virtual currencies.
The changes to the GST were recently outlined by Lawrence Wong, the second Minister for finance, during the second reading of the Goods and Services Tax (Amendment) Bill 2019.
The reforms are expected to take effect on January 1 and will be applied directly on imported services related to business-to-business transactions. According to the minister, these amendments are specifically addressing the Overseas Vendor Registration act. This will include allowing GST group members to register to become overseas suppliers.
This new mechanism will allow local electronic marketplace operators to be able to account for all business-to-business and business-to-consumer suppliers. It will also help to clarify what the scope is of the GST reverse charge. This will apply to all businesses that are required to register with the GST or who are liable for registration with the governmental authority.
For those involved with virtual currencies, the second part of the amendment is what should be of most interest. The proposals will reform how the GST treats digital payment tokens.
Cryptocurrencies will not be considered legal tender under the amendment. However, they will be considered as an acceptable medium of exchange for some transaction types. The legislation will exempt the supply of digital payment tokens that are used in exchange for fiat currency from the GST. Loans of digital payment tokens will also be exempt from the governmental body.
For owners of digital currencies, the amendment will not affect owners or asset holders. For those using these digital currencies, the only tax that will be imposed will be directly upon the supply of goods and services, but not on the tokens themselves. This should help to make the tax process for owners of these currencies a lot easier to handle, not having to worry about tax ramifications.
The GST has been in operation since 1986 and is the governmental authority that regulates income tax and corporate tax. The GST was first implemented as a single rate back in 1994 at a rate of 1%. However, that rate has increased marginally over the years and is expected to increase to 7% in 2021 and 9% in 2025. For those who are owners or users of digital tokens, they will not be required to pay these taxes.