What are the tax implications of accepting cryptocurrencies?
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.