Singapore Welcomes Bitcoin Transactions; Sets Guidelines for Business, Consumer

Bitcoin might not be welcome in China, but that doesn't mean some other countries won't embrace the virtual currency.

Reports out Thursday have the Inland Revenue Authority of Singapore (IRAS) issuing tax reform for the purchase, sale, and exchange of Bitcoin with respect to individuals and businesses.

Should a business buys or sells Bitcoin, the transaction will be subject to capital gains tax. If Bitcoin is part of the businesses investment portfolio, the gains will be capital in nature and not subject to taxation.

Sellers accepting Bitcoin will be subject to goods and services tax (GST) tax, if applicable. For virtual exchanges, like in a video game, there won't be taxes until the Bitcoins are exchanged for real goods or services.

Under IRAS and Singapore's GST Act, Bitcoin isn't a good, nor does it count as money or a currency. The IRAS had this to say, Where bitcoins are accepted as payment for real goods or services (e.g. digitized items like online music), such transactions are treated as a barter exchange. GST should be accounted for on the individual supplies made (i.e. the supply of bitcoins and the supply of real goods or services) if the parties involved are GST-registered persons. However if the bitcoins are used to exchange for virtual goods or services within the virtual gaming world, as a concession, the supply of bitcoins will not be taxed until the bitcoins are exchanged for real monies, goods or services.

More on the IRAS guidelines can be read here. Bitcoin is are about $813 Thursday afternoon.

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