Singapore’s income tax rules, which rank among the lowest in Asia, now apply to NFT transactions as well. It will be applicable to those who earn income from non-fungible tokens or trading.
Lawrence Wong, the Finance Minister, told the Parliament on Friday that the income tax treatment will be determined based on the nature and use of the NFTs. He highlighted that capital gains will not be taxed. Wong explained that gains will not be taxable as Singapore does not have a capital gains tax regime.
This is seen as a support to long-term spending. It will boost Singapore’s revenues and enhance the city’s growing healthcare needs. The Singapore government had earlier warned citizens regarding NFTs. Moreover, the country’s so-called Crypto King was rebuked for promoting play-to-earn games.
The Monetary Authority of Singapore (MAS) had banned platforms from trading cryptocurrency, the currency used for making NFT purchases or advertising their services. Tharman Shanmugaratnam, the minister in charge of MAS, said the agency does not and cannot regulate all things or products that people choose to put their money in. He pointed out that MAS considers the substance of an asset when assessing whether a product or activity should come under its regulatory remit.
Singapore’s Central Bank had said last month that it would not regulate the NFT market. Analysts say this is similar to South Korea’s tax regime. The Inland Revenue Authority (IRA) will impose taxes when it determines that an individual is living off trading NFTs – as they would do for income.