The Inland Revenue Authority of Singapore (IRAS) thinks it found a workable way to bring bitcoins in from the cold. In a response to the bitcoin brokerage Coin Republic, as reported by CoinDesk’s Jon Southurst,
IRAS says it will treat bitcoins like a product—no different than an iPhone or an MP3 or a shrink-wrapped piece of software—which incurs taxes when it is sold for cash or used to pay for goods or services:
The IRAS reminded Coin Republic that bitcoins do not fit the definition of ‘money’ or ‘currency’, so supplying them is seen as a good/service for taxation purposes rather than a currency exchange.The tax treatment is slightly different for companies or individuals that buy bitcoins as part of a long-term investment, and then sell them at a higher price at a later date. In that case the proceeds would be treated as a capital gain, which Singapore does not tax.
“As a regional financial services hub and IT center, Singapore could provide a useful model for authorities in other countries to follow,” CoinDesk notes. And therein lies the rub: Governments all over the world are trying to figure out how to handle bitcoins. Germany has defined them as “private money” and a “financial instrument,” China has strongly discouraged companies from using bitcoins, India is trying to figure out how to tax bitcoin miners, and the US Congress thinks that bitcoin’s very existence might violate a Civil War era postal law.
http://qz.com/165207/singapore-figured-out-how-to-tax-bitcoin-treat-it-like-a-product-not-money/