Hobby-Miners Exempt from Tax in Singapore

Singapore’s tax authority has updated it’s regulations regarding cryptocurrency mining-exempting “hobbyist” miners from being taxed.


The IRAS, Inland Revenue Authority of Singapore, just recently issued updated tax guidelines on April 17th.


The guidelines were set in regards to several types of digital tokens, such as; utility tokens, payment tokens, security tokens, and ICO (initial coin offering) tokens. The IRAS clarified that fluctuations in the value of the tokens held by miners, individuals, and businesses is not taxable or deductible unless realized. 


Payment Tokens concerning Businesses


According to the IRAS. payment tokens are not to be considered a legal tender. However, they clarify that the use of payment tokens in executed transactions are considered a “barter trade.”

When businesses receive payment tokens they will incur normal taxation based on the value of underlying goods sold. Deductions are available to businesses that use their payment tokens to pay for goods and services. 


Security Tokens


These tokens will be taxed according to “the nature of the return derived from a security token.” To clarify, the taxation is determined by what value it brings to the owner-whether in the form of interest or dividend. Mainly, the IRAS looks to determine whether the security token is a “capital or revenue asset to the owner.”


Miners exempt from Taxing Capital Gains on Mined Tokens


Taxation strictly depends on the intentions of the crypto miner- whether they perform their mining activity with the intention to profit. 


“Miners may perform mining as a hobby or to hold the tokens mined as a long-term investment. If so, the disposal gains / losses of the payment tokens are not taxable / deductible.”


Companies and Individuals that engaged in commercial mining will be subject to tax on profits at the time of token disposal, meanwhile profits on the sale of mined tokens are not subject to taxation. 

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