Overview of Digital Tokens (DTs)

Tax treatment of digital tokens in Singapore


  • According to IRAS (e-Tax Guide)
    last revised 9 October 2021

    2.3 The general tax treatment for transactions involving the use of payment tokens, utility tokens and security tokens are as follows:

    Type of digital token  Tax Treatment 
    Payment token Payment token is regarded as an intangible property. Consequently, transactions involving the use of payment tokens as payment for goods or services are viewed as barter trade and the value of goods or services transferred should be determined at the point of transaction.
    Utility token  The use of a utility token to exchange for goods or services is unlikely to create an income subject to tax on the user at the point of exchange. It may, on the other hand, give rise to a deductible expense subject to usual deduction rules. 
    Security token  The taxability of the return derived from a security token depends on the nature of the return, for example, whether it is in the form of interest, dividend or other distributions.


    2.5 For guidance on GST treatment of transactions involving digital payment tokens, please refer to the IRAS e-Tax Guide “GST: Digital Payment Tokens”.


    Based on the e-Tax Guide published by Inland Revenue Authority of Singapore (IRAS), types of digital tokens
    within the scope and the tax treatments are:

    1. Payment tokens
    A payment token represents a digital right that can be used or is intended to be used as a means of payment for goods and/or services. IRAS views it is regarded as an intangible property. Hence, transactions involving the use of payment tokens as payment for goods or services are viewed as barter trade and the value of goods or services transferred should be determined at the point of transaction. Consequently, where a business receives payment tokens for the goods or services it has provided, the business would be taxed on the value of the underlying goods provided/services performed. Conversely, where a business uses payment tokens to pay for goods and services, a deduction for the goods purchased or services received is allowable, subject to general deduction rules. The value of the deduction will be based on the value of the underlying goods purchased/services received.

    2. Utility tokens
    A digital token that represents a right to a good or service. When a person (“the user”) acquires a utility token to exchange for goods or services to be provided in future, the amount incurred by the user to purchase the relevant utility token will be treated as a prepayment. Subject to tax deduction rules, a deduction will be allowed on the amount incurred at the point the token is used to exchange for the goods or service. While the proceeds from the issuance of utility tokens will generally be regarded as deferred revenue.

    3. Security tokens
    A digital token that represents a stake or an investment in an underlying asset e.g. shares in company, bonds, etc. Thus, the most common types of security token that have been issued are accounted for as a form of debt or equity. The nature of a security token would depend on the rights and obligations tied to that token. This will, in turn, determine the nature of the returns derived by the security token holder from the security token, which could be interests, dividends or other distributions, and be taxed on the security token holder accordingly. Where the security token is disposed by the holder, tax treatment of the gain/ loss on disposal will depend on whether the security token is a capital or revenue asset to the token holder, and accordingly, whether the gain/ loss is capital or revenue in nature. While the proceeds from the issuance of security token is akin to proceeds from the issuance of securities or other investment assets/instruments and is thus capital in nature and not taxable.