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According to google, Singapore has not always been a technology leader. Having gained independence from Malaysia in 1965, the island and the city of the same name had neither jobs, nor infrastructure, nor, it seemed, even the future.
Thanks to sound public administration, as well as flexible and changing by the requirements of the time, Singapore is now one of the most developed countries in the world. In 2017, the state ranked 11th among the countries with the highest HDI (human development index) and was one of the financial centers of the planet.
Singapore openly supports cryptocurrencies and blockchain projects; therefore, it is a popular jurisdiction for cryptocurrency companies along with Switzerland.
The state and regulators are more than welcome innovation. In Singapore, a particular regulatory sandbox for fintech projects (FinTech Regulatory Sandbox) was created, which allows you to carry out activities for six months without any individual licenses.
There is a high probability that soon, regulators will establish precise requirements for the implementation of cryptocurrency activities.
The Republic of Singapore is a city-state geographically located on islands in Southeast Asia.
At the time of independence, Singapore was a tiny and developing country that had to import even fresh water and building sand. However, the country’s economic development strategy under the government of Lee Kuan Yew has turned Singapore into a financial and trade center of Southeast Asia.
The constant attraction of foreign investment over several decades has borne fruit. Today, Singapore is the capital of innovative startups, an industrialized state that maintains diplomatic relations with 186 countries of the world, although many of them do not even have Singapore embassies. Member of international communities such as the United Nations, the British Commonwealth, ASEAN, and the Non-Aligned Movement.
Bitcoin in Singapore does not apply to means of payment; therefore, until recently, it remained outside the scope of government regulation. For the same reason, Singapore was the most popular jurisdiction for the establishment of companies that planned to carry out commercial activities in the field of Blockchain and cryptocurrencies.
But in the fall of 2017, the Central Bank of Singapore decided to start a public hearing, which was held from November 21, 2017, to January 8, 2018, regarding the possible inclusion of bitcoin and other cryptocurrencies in the provisions of the current legislation in the field of electronic payment systems.
Thus, the Central Bank of Singapore’s currency department has developed a corresponding bill, which is aimed at optimizing the regulation of payment services and aims to include digital currencies and other innovations in the list of regulated payment transactions. The new regulatory framework will have to expand the scope of regulation, including domestic money transfers, the sale, and purchase of virtual currencies.
In addition, the new law will have to take into account all AML & KYC requirements and the associated risks (money laundering and terrorist financing risks), and if passed, payment providers will have the opportunity to have only one license, which will authorize which – either a specific type of payment, or simultaneously on all existing types of payment transactions. A permit will only be issued for activities that are directly related to payments.
The regulator and licensor, in this case, will most likely be the Singapore Monetary Authority (MAS), which has managed to officially declare that cryptocurrency will not be subject to control by state authorities. Only activity with it will fall under control – purchase and sale and ICO.
At the same time, digital ICO tokens will be equated with securities, and as a result, they will have state regulation similar to securities, including registration of an issue prospectus, obtaining licenses of an intermediary or exchange operator and mandatory compliance with AML rules and laws on combating the financing of terrorism.
However, now, according to the current legislation of Singapore, commercial activities related to cryptocurrencies are taxable.
According to a written clarification from the Singapore Inland Revenue Authority of Singapore (IRAS), companies involved in the purchase and sale of bitcoins are subject to the standard income tax.
Income tax ranges from 0 to 17% and depends on the amount of profit of the enterprise. Meanwhile, newly created companies are granted a 3-year tax rate exemption with a zero rate, which in itself deserves respect and attracts most international Blockchain startups to this country. Real, participation in this preferential scheme is available for all types of new companies, except for organizations whose main activity is to attract investment, or real estate purchase and sale transactions.
In transactions where bitcoin acts as a means of payment for real goods and services, value-added tax (goods and services tax, GST) is levied. The latter in Singapore is only 7%. This applies only to cases where both organizations involved in the transaction are registered residents of the country – for non-residents GST is not charged. Virtual services such as in-app purchases are also not taxed.
A long-term investment in bitcoin is considered an investment in capital and will not be taxed. Moreover, regardless of whether bitcoins will be accepted in the future as a means of payment for goods and services, fiscal and regulatory authorities do not plan to intervene in this process. A developed banking system is not a hindrance to this either, and MAS does not intend to establish strict regulatory standards for cryptocurrencies.
Thus, as of the present moment, cryptocurrencies and ICOs are outside the scope of Singapore’s current financial legislation. For Singapore’s financial industry, using virtual currencies as a payment method is not critical.
While the cryptocurrency itself is mainly intended for speculative investment purposes, and the volume of crypto trading in Singapore is much lower than in the same markets in the USA, Japan, and Hong Kong.
MAS will continue to monitor developments in the crypto industry and, if necessary, will consider the development of more focused standards. That is, MAS at the moment, although it does not regulate virtual currencies, however, it monitors the activities related to them, as soon as such activity comes into the view of the financial regulator.
The instructions provided by the IRAS are rational and well thought out. Any business owner can be calm while he pays taxes on income from the sale of bitcoin since cryptocurrency remains mostly unregulated. That is why companies that are looking for some financial stability can safely choose Singapore as their primary parent jurisdiction, while receiving maximum support from the state, not being afraid to conduct any legal operations with bitcoin.
In 2014, the Singapore Tax Service (Inland Revenue Authority of Singapore; after this – “IRAS”) for taxation defined bitcoin as a product or service and this was the only legislative definition of bitcoin trading Singapore. About cryptocurrencies, the provisions of the law in the field of combating money laundering and combating the financing of terrorism apply.
Otherwise, cryptocurrencies are still in the gray zone; that’s why it may be difficult to buy bitcoin. At the moment (as of November 2017) work is underway on:
The government officially supports this work.
Registering a company in Singapore will be much cheaper than registering a company in:
On average, registration and annual maintenance of an LLC in Singapore will cost $ 4000-8000, while in Switzerland, registration and annual maintenance of an LLC will cost from 45 thousand to 55 thousand US dollars. No special requirements for the size of the authorized capital have been established, in addition to the fact that companies must issue at least one share.
However, the law establishes a need that one of the members of the board of directors must be a resident or citizen of Singapore. Also, another requirement is the presence of a secretary in the company, who must also be a resident or citizen of Singapore. The amount of registration and annual maintenance of the company in Singapore specified in the previous paragraph is already included.
IRAS notes that companies buying cryptocurrencies for long-term investment purposes can profit from the sale of these virtual currencies. However, since there is no capital gains tax in Singapore, such income is not taxed.
Under Singapore law, a resident company will not pay tax on dividends paid abroad. Also, a fee paid from Singapore elsewhere is taxed at a rate of 15%, and royalties at a rate of 10%. At the same time, double taxation treaties may provide for other frequencies. The latter can be either lower or higher than the above rates.
The corporate income tax is 17%. In Singapore, all income is taxed, regardless of the source. Although to date, there is no definite position of the local tax service regarding whether the tax base is fixed at the time of receipt of cryptocurrencies, or at the time of going to fiat.
Companies that trade (i.e., buy and sell) cryptocurrency as their primary business will be taxed on income derived from such trading. Income earned by companies that are mining or trading cryptocurrency in exchange for fiat money or remuneration is also subject to income tax.
Nevertheless, a partial exemption from the corporate income tax of 75% is possible (provided for the first “income” in the amount of 10,000 Singapore dollars (SGD) – about 7,300 USD) from taxable income and 50% for the next 290,000 SGD (about $ 210,200).
The tax on products and services is GST (equivalent to VAT – 7%). Following IRAS clarifications, cryptocurrency transactions should be regarded as services that are taxed on goods and services. At the same time, if Bitcoin was received as a payment for products and/or services, then this kind of operation is considered a barter since Bitcoin and cryptocurrencies are recognized as goods.
Companies are required to register as GST payers if their annual turnover exceeds 1,000,000 SGD (about 724,600 US dollars).
In the case of the goods’ sale (i.e., tokens) to a non-resident, the company is exempt from VAT. In the case when such a purchase is carried out by a resident of Singapore, the company is exempted from paying tax only if its annual turnover is less than 1,000,000 SGD (724,600 US dollars).
So for a small ICO, where a company (resident of Singapore) will collect less than 1,000,000 SGD, you will not have to pay VAT from your wallet.
A company may apply for registration with a GST payer voluntarily, even if its turnover is less than the above amount. After registration voluntarily, the taxpayer must remain registered for at least two years and keep:
Also, you may need any other company records for at least five years (even if the business was transferred to another country, etc.).
A registered payer must submit a GST income statement, usually quarterly (electronically), and must pay tax within one month after the end of the GST reporting period. If IRAS recognizes the services provided by the company (including financial services) as “international services,” then the tax can be determined at a rate of 0%.
To register as a GST payer to buy bitcoin and doing other operations, you will need to fill out a particular registration form (GST F1) and send it to IRAS from the service’s website. The process of registering a GST payer in Singapore takes about three weeks, and the service is free. If the registration were successful, you would receive a letter with registration notification. Then, you will be able to purchase bitcoin, ethereum, and another cryptocurrency.
The great international cryptocurrency broker Dowmarkets is top-rated in Singapore. Dowmarkets offers five different types of accounts. Each includes special conditions that are suitable for traders of various levels:
For successful trading and development of skills, Dowmarkets offers many tools for trading bitcoins and litecoins. Withdrawal of funds is very convenient, and the interface of the platform is easy to understand. Among them: the MT4 web-terminal trading platform, an economic calendar with important news, financial news, a commercial market overview, spreads table and trading hours for cryptocurrency trading.
For success in the market, a decisive role is played not only by the ability to analyze and predict the market but also by the trading conditions that the broker offers. In this regard, Dowmarkets is noticeably ahead of the competition. The broker’s bonus incentive system sometimes allows you to increase the deposit several times and get a significantly more substantial income.
The verification of personal data is straightforward. Beginners and inexperienced traders will appreciate the possibility of secure trading and insurance deposits against losses. And those who are confident in their abilities and love to trade “for the big one” can receive a nice bitcoin cash reward for success in their achievements in the binary options market. Also, debit cards and the credit ones are available.
The Monetary Authority of Singapore (MAS), which acts as the country’s central bank, has warned eight cryptocurrency exchanges of the country about the inadmissibility of trading in digital assets, which are securities or futures contracts.
On May 24, 2018, the agency released a document according to which cryptocurrency exchanges should coordinate with MAS their intentions to process transactions with digital assets that fall under the scope of the Law on Securities and Futures (SFA).
The management clarified that cryptocurrency exchanges should be engaged in their immediate tasks, namely, assistance in buying and selling digital assets for fiat money, as well as facilitate the exchange of Сoinbase between platform users using direct contact. If digital assets are securities or futures contracts, exchanges should immediately stop trading such tokens until the site is authorized as an approved or recognized market operator.
MAS warned one of the top organizers of the ICO that he was not entitled to offer his tokens to investors from Singapore, as they provide the right to receive a share in the global business, which means that they are securities whose sale is prohibited in Singapore without appropriate permission from the currency office of the country.
The management once again reminded digital issuers, intermediariesб and platforms that offer exchange services or the direct sale of digital assets, so that they adhere to all related laws.
“The number of bitcoin exchanges in Singapore is growing. We do not see the need to limit them if they work within the law. But if the cryptocurrency exchange, the issuer of digital assets or the intermediary violates our securities laws, then MAS will take decisive action (for example, arrest his credit card or close his account). The public should know that there is no regulatory protection if they prefer to trade on non-regulated cryptocurrency platforms or invest in digital tokens that go beyond the MAS rules, ”said Lee Boon Ngiap, assistant managing director of the service.
The recent question answered by the head of MAS was “does the government monitor the use / investments in cryptocurrencies in Singapore”, as well as “how do cryptocurrencies affect the finance industry in long terms, are studies being conducted to assess the problems and risks of using/investing in cryptocurrencies, and whether regulatory requirements are necessary for her in the future. ”
The Chairman of MAS responded to all points. At first, he said that according to the Central Bank of Singapore, cryptocurrency is not legal tender. The Deputy Prime Minister defined legal tender as “a medium of exchange recognized by law as valid for fulfilling financial obligations.”
“MAS is monitoring the use of virtual currencies,” said Shanmugaratnam.
The financial regulator believes that the use of cryptocurrencies in Singapore is not very common, and that “only about 20 Singaporean enterprises (restaurants and online stores) are currently accepting bitcoin.” He added that “in Singapore’s financial industry, the use of virtual currencies as a payment method is negligible.”
The Minister of the Monetary Authority of Singapore (MAS), the national central bank, said its agency is working on a framework for regulating payments made in bitcoins.
Tarman Shanmugaratnam, who also serves as the country’s prime minister, confirmed that his organization’s officials are studying and monitoring the cryptocurrency market, with Bitcoin, Ethereum, and other virtual coins in their field of vision. The Singapore authorities do not intend to regulate this market seriously, but some types of peripheral activity require the establishment of a statutory framework.
The main tasks of officials will be the fight against money laundering and the financing of terrorism.
As for the ICO, the minister is not sure that it makes sense to intervene in the regulation of the first issue of tokens. But if such a need arises, his department will deal with this problem.
“Virtual currencies can become more than just a means of payment, develop to “second generation” tokens when they will be evidence of ownership of different types of assets,” said Shanmugaratnam. – They will become an analog of certificates of ownership of an asset or stock option. This is a financial activity that is subject to the regulatory functions of MAS.
The official said that although cryptocurrency trading in the world is a popular type of activity, especially in the USA, Japan, Hong Kong, in Singapore it is carried out in small volumes. While in the country only 20 trading networks accept bitcoins for payment of goods.
In September, several accounts of enterprises based in Singapore were closed by financial regulators without explanation. At that time, the country’s Central Bank stated that it was a private decision of commercial banks, in the adoption of which this agency did not intervene.
Singapore-based startup TenX has come up with a way to solve the main problem of cryptocurrency owners – the inability to pay their savings in the usual and convenient way
The startup created an application for iOS and Android, which serves both as a wallet and as a decentralized free exchange for exchanging cryptocurrencies. Also, TenX interacts with Visa and MasterCard, and cryptocurrency holders will be able to receive plastic cards of these two types (both virtual for one and a half dollars, and physical for 15). Cryptocurrencies – Ethereum, Bitcoin and Dash – at the time of transactions will be converted into local currencies at the current exchange rate. In this way, the problem of turning cryptocurrencies into familiar money will be solved.
Note that spending on cryptocurrencies today is quite difficult. Exchange for the usual money is done using exchanges, and this is not always a quick and straightforward process. TenX decided to simplify it as much as possible, and there are chances that the Singapore startup will succeed. TenX held an ICO (Initial Coin Offering), this is such a cryptocurrency analog of the initial public offering and received about $ 57 million from 4 thousand investors in 7 minutes. This amount will be spent on the development of the project.
Recall that in many regions, including Russia and China, cryptocurrency miners swept all the top video cards from the shelves. There is a real shortage of components of this type.
Copernicus Gold (CPN Gold) was launched in Singapore this summer. According to its creator, Russian businessman Vladimir Frolov, for the four years of the team’s work, the founders invested about $ 1 million of their own money in the project and the investor about $ 3 million (name not disclosed). To open an account in the service, you need three minutes: you need to register in the system, enter the data, and buy a dollar or euro from a bank card. A minute – and in the virtual wallet appears a virtual currency, backed by gold.
You can buy currency in any volume, starting from one-thousandth of a gram – for it, and you can get one-thousandth of one unit of virtual currency.
The currency in the new system is provided with physical gold: for each coin purchased in the service, 1 g of gold is deposited in one of Singapore’s gold vaults. Such well-guarded and gold-filled vaults are located all over the world, and it is with them that brokers and exchanges work. The system automatically buys gold from the broker at the moment when it is necessary to replenish its stock.
“This does not mean that we take gold bars and transfer them somewhere: they remain in the same vaults for safekeeping, but in fact, the gold already belongs to us, or rather, to our customers,” Frolov explains. The system monitors and predicts demand for metal among users: when they buy more gold, it buys it from brokers with the money of customers. If customers sell metal, the system automatically does the same.
Frolov is primarily driven by faith in gold: when the global financial system is unstable, gold becomes a powerful investment tool, the entrepreneur is sure (Photo: Alena Kondyurina for RBC)
To start, the project team needed to purchase several kilograms of gold. The company replenishes its reserves with the money received in the service and expects the arrival of partners – banks and other market participants, who, Frolov hopes, will make their payments through the system and provide their customers with the opportunity to buy gold.
The project team is already negotiating with several organizations, and preliminary agreements have been reached with one Singaporean player, he says, without revealing the names of the companies. In the meantime, ordinary people use CPN Gold – about a thousand people who learned about the service from friends or on specialized resources.
The service, built by the Frolov team, allows you to conduct transactions not only in the cryptocurrency of the project but also in dollars and euros. These currencies can be as many as you like, the entrepreneur says: “For example, if we began to do a service in Russia, where gold is subject to VAT. and buying it is not profitable, we could include the same ruble in the system for making payments. It does not matter”.
One of the most common questions that the service team receives is: will the new system be able to provide sales, for example, of an online store with a large number of payments. Frolov says that all transactions in the service are carried out in the so-called physical online: the transferred funds are not reserved for several days by the bank but are transferred from account to account instantly.
Therefore, the service requires much less and even working capital tending to zero, he says: “Imagine, you pay for the goods, and the store immediately receives money in your account. The risks of non-payment are removed, and its cost is sharply reduced.”
Sometimes cryptocurrency users, regardless of location, are faced with one-way banking solutions. Many financial institutions seek to close cryptocurrency bank accounts.
Recently, a large number of private and legal entities in Singapore found their bank accounts closed for no apparent reason. In such a simple way, local banks are struggling with cryptocurrency activity.
Events take place, as cryptocurrencies are still in an illegal state in the country. There is no official Bitcoin regulation in Singapore. It also means that it is not prohibited. But despite this, some local banks close their accounts to their customers.
These events do not say that local authorities are involved in the process since such actions are not typical of Singapore. At the moment, about a dozen legal entities have suffered from unilateral actions by banks. Moreover, not a single financial institution gave an official explanation of the reasons for its decision.
It is clear that specific forces do not want the success of Bitcoin or altcoins. However, the Central Bank of Singapore does not intervene in the decisions of commercial banks. This indicates that all such decisions were made within the banks themselves.
We are witnessing adverse events in Singapore, but no one knows what the real causes of these processes are.