Singapore Finance Minister, Lawrence Wong announced that "prevailing income tax rules" will apply to income derived from non-fungible token (NFT) transactions or trading.
In a response to Yio Chu Kang SMC Member of Parliament Yip Hon Weng during a parliamentary session, Wong added that the income tax treatment "will be determined based on the nature and use of the NFT".
However, capital gains derived from NFT transactions will not be taxed as mentioned by Wong due to the absence of a capital tax regime in Singapore.
The tax reforms are recently adjusted to support longer-term spending and to boost revenues in aiding the country's growing healthcare needs.
Currently, Singapore’s income tax rules rank among the lowest in Asia.
Classification of NFT Trading
- If an individual is living off NFT trading, taxes will be imposed as they would for income.
- The Inland Revenue Authority of Singapore will determine whether someone is trading in NFTs or earning income from NFT transactions.
- Aspects such as the nature of the asset, intention of purchase, holding period, frequency and volume of similar transactions, financial arrangement to keep the purchased asset for a long time, and reasons for its disposal will all be taken into account by the Inland Revenue Authority of Singapore.
Countries that Impose Crypto Tax
- In Australia, individuals pay taxes from the revenue generated from trading NFTs, and when NFTs are used to generate profit including capital gains tax.
- The Internal Revenue Service of US treats cryptocurrencies as property for tax purposes, while capital gains or losses must be taken into account when digital currency is traded for real currency.
Booming NFT Scene in Singapore
- Singapore-based Instagram influencer, Irene Zhao, recently raked in over US$5 million with her NFT collection.
- Mucciaccia Gallery, a traditional art gallery in Singapore, held its first NFT auction last year.
- Singaporean creator Chanel Lee left her corporate job to launch Tasty Toastys that sold out within a week and the collection has recorded over 24 ETH (~US$75,000) in trading volume.
