Income Tax Treatment of Digital Tokens

Businesses that choose to accept digital tokens such as Bitcoins for their remuneration or revenue are subject to normal income tax rules. They will be taxed on the income derived from or received in Singapore. Tax deductions will be allowed, where permissible, under our tax laws.

Digital Tokens as Mode of Payment

Generally, businesses that accept digital tokens as payment for goods or services should record the sale based on the open market value of the goods or services in Singapore dollars. The same applies for businesses which pay for goods or services using digital tokens.

If the open market value of the goods or services that would have otherwise been exchanged in Singapore dollars cannot be determined (e.g. the good or service is only traded with digital tokens), the digital token exchange rate at the point of the transaction may be used.

Trading in Digital Tokens

Businesses that buy and sell digital tokens in the ordinary course of their business will be taxed on the profit derived from trading in the digital token. Profits derived by businesses which mine and trade digital tokens in exchange for money are also subject to tax.

Businesses that buy digital tokens for long-term investment purposes may enjoy a capital gain from the disposal of these digital tokens. However, as there are no capital gains taxes in Singapore, such gains are not subject to tax.

Whether gains from disposal of digital tokens are trading or capital gains depends on the facts and circumstances of each case. Factors such as purpose, frequency of transactions, and holding periods are considered when determining if such gains are taxable. For more information, please refer to Determining the Existence of a Trade.

For more details on the tax implications of activities involving digital tokens, please refer to the e-Tax Guide: Income Tax Treatment of Digital Tokens (PDF, 236KB).