Singapore’s income tax treatment will be determined based on the nature and use of the NFT.
Taxing NFTs
According to the latest Business Times report, Singaporean Finance Minister Lawrence Wong, addressing Parliament, revealed that the current income tax rules will apply to income derived from transactions or exchanges of non-fungible tokens (NFT). Due to Singapore’s lack of a capital tax regime, individuals who derive capital gains from NFT transactions will not be taxed, Wong said.
The news comes amid the recent tax changes that many analysts believe will help in reducing inequality, strengthening the social compact, aiding longer-term spending.
Singapore’s ‘technology-neutral stance’ on NFTs
Earlier in January this year, Singapore officials warned citizens in terms of decisions related to digital investment vehicles, especially in the nascent NFT and metaverse sectors. Despite being often touted as Asia’s next crypto hub, Singapore had been urging global regulators to exercise greater scrutiny over digital investments. He had revealed that he closely explored the risks associated with technologies such as blockchain, decentralized finance, NFTs and the metaverse.
Last month, Singapore’s central bank said it will not regulate the NFT market. Responding to a parliamentary question on regulating NFT activities, Tharman Shanmugaratnam, Senior Minister and Minister in charge of Monetary Authority of Singapore (MAS) had stated:
“MAS does not and cannot regulate all the things or products in which people choose to invest their money. We consider the substance of an asset when assessing whether a product or activity should fall within MAS’ regulatory mandate. The MAS does not currently regulate NFTs given the nature of their underlying assets, like the previous few examples. This is also the position taken by most other leading jurisdictions.
While asking consumers to exercise extreme caution, Shanmugaratnam revealed that MAS has opted for a “tech-neutral stance” and added that it “looks through” to the underlying features of the token to determine if it is to be regulated by the regulatory authority. An NFT will be subjected to MAS’ regulatory requirements if it has the characteristics of a capital markets product under the Securities and Futures Act (SFA).
Meanwhile, Ravi Menon – chief executive of MAS – had earlier revealed that the city-state has no plans to ban Bitcoin and cryptocurrencies as it can be a key player in the digitalized future. .
