The digital tokens tax that has been imposed in Singapore is a blessing in disguise. The move is quite timely as crypto adoption is on the rise. It is clear indication governments are developing industry in the crypto sphere.
Most countries have been hiding behind the bad aspects of cryptocurrencies despite the glaring use cases the digital money economy has presented. The industry has grown within a short period and is now offering better products compared to the traditional fiat.
Crypto and blockchain are touching every part of lifestyles and it is no surprise that governments are keen on reaping from the sector through taxation. However, taxing assets that are highly volatile can be a huge task but achievable.
Imposing digital tokens tax from wallet level
The U.S. took the lead by imposing digital tokens tax from the wallet level. Users saving crypto on their wallets are required to pay income tax. Already, the Internal Revenue Service (IRS) is in communication with over 10,000 crypto holders urging them to file their tax returns.
Singapore has followed the same route, formulating a policy that requires crypto holders to pay taxes. In its report dated April 17, the Inland Revenue Authority of Singapore (IRAS) outlines the “Income Tax treatment of Digital Tokens”. The report is a clarification of a wide range of tax treatments including digital tokens.
Imposing digital tokens tax better than banning
Turning to digital tokens tax is better than a total ban; they are being perceived as a legitimate source of revenues. At the rate at which cryptocurrencies are spreading across the globe, it is only logical for governments to give in and look at them as an extra revenue stream.
Many countries are taking a cue from the Australian authorities; they have the best taxation regime in the world. However, Argentina, Belarus, Bulgaria, and the United Kingdom are other countries that have created a good environment through formulating a way to tax digital tokens.