Currently, the Monetary Association of Singapore does not regulate virtual currencies and their derivaties
Singapore’s reputation for being a strictly regulated country is strangely not so evident in regulating cryptocurrencies on the little red dot.
The Monetary Association of Singapore (MAS) does not regulate virtual currencies and their derivatives. [Moneysense.gov, 2018] It is expressed that MAS does not regulate virtual currencies because they are not considered securities or legal tender. This would also mean that there will be no protection for people who lose money while transacting in virtual currencies and related investments.
However, this does not exclude the fact that financial institutions that offer such products that are not regulated by the MAS, would still have to disclose the fact that they are not approved by the MAS and the associated risks of the products in a clear and easily understood manner to investors.
So buying and selling cryptocurrency in Singapore would not be too difficult. However, if you were to obtain cryptocurrencies in the form of revenue or remuneration, it would still be taxable in Singapore. This is confirmed as a tax officer revealed to us,
“In terms of income tax treatment, please note that generally, the buying and selling of cryptocurrencies is viewed as personal investments and any profits (losses) derived from buying/selling them are capital in nature and are not taxable (deductible) in Singapore. However, please note that if the cryptocurrencies are received as remuneration or revenue, they would be taxable.”
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But does that mean that someone from the United States or other countries can use this to their advantage and cash out their cryptocurrency in Singapore?
Singapore’s law may not be strict when it comes to cryptocurrency but Singapore is on high-alert when it comes to money laundering activities, which is what cryptocurrency is best known for.
Travelling in and out of Singapore with S$20,000 or more without declaring it to the authorities would result in a penalty for the failure to report cross-border movements of cash exceeding prescribed amount under section 48C of the CDSA for an individual is a fine not exceeding $50,000 or a term of imprisonment not exceeding three years, or both. [SingaporeLegalAdvice.com, 2017]
So if you’re someone who is coming from another country and looking to cash out your cryptocurrency in Singapore, it is very important for you to get a legitimate receipt from a registered company in Singapore.
This receipt would prove to the authorities that you have sold cryptocurrency from an exchange in Singapore. Everyone that is looking to leave Singapore with more than SGD20,000 will have to give a report in respect of its movements to the Suspicious Transaction Reporting Office (STRO) of the Commercial Affairs Department, Singapore Police Force. [police.gov, 2017]
This would also mean that when you go back to your home country, you would be required to produce the same receipt when you reach your home country to declare the amount of money that you are bringing into the country. This would result in you getting taxed according to the country’s own tax regulations on cryptocurrency.
An example would be Japan, where Japan’s National Tax Agency ruled that capital gains on these transactions are a form of ‘miscellaneous income’, investors are now required to declare their profits in annual tax filings. Unlike winnings on stocks and foreign currencies, which are taxed around 20 per cent, Japan’s levy on profits from virtual currency runs from 15 percent to 55 percent. The top amount applies to people with annual earnings of 40 million yen. In recent months, about 40 per cent of all trading in Bitcoins, the most widely known virtual currency, has been against the yen. [Bloomberg.com, 2018]
So would that mean that it would be easier to avoid tax by just opening up a bank account in Singapore?
It is hard for someone to open a Singapore bank account without being a permanent resident or a Singapore Citizen in Singapore. To apply for a bank account in Singapore, you would need your passport and an employment pass or a study pass. This also means that you have to apply for an employment or a study pass in order for the bank to consider your application.
You can only apply for an employment pass through your employer, which means you can’t get one unless you have a job. In the same way, you will need to submit a number of documents in order to obtain a student pass, including a study plan.
Unfortunately, these requirements make it very difficult to open a bank account in Singapore if you are just visiting and not planning to settle here. It will also make it difficult to open an account in your own name if you’re moving with your significant other and don’t plan to work or study. [transferwise, 2017]
So can foreigners cash out, tax-free, in Singapore?
The straightforward answer is yes. You can cash out your cryptocurrency in Singapore, as long as it is from a reputable exchange, preferably over the counter for reliability and also be able to obtain a receipt for the transaction.
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Following that transaction, make sure to remember to declare your amount, if it is above S$20,000, at the airport before you board your flight. You can cash out cryptocurrency tax-free within Singapore. However, we are not in control of the regulations outside of our borders. Please make sure to double check regulations in your home country on cryptocurrencies before attempting to make the trip to Singapore to cash out and bring it back to your home country.
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