Lawrence Wong, Singapore’s finance minister, announced today that “prevailing income tax rules will apply” to Income derived from non-fungible token (NFT) transactions.
He stated that the tax treatment and economics “will be determined based on the nature and use of the NFT.”
According to Wong, some individuals may also derive capital gains from such transactions. Those profits won’t be deducted because the country does not have a regime of taxing capital gains.
Different countries have been releasing Taxation plans for NFTs and Crypto Assets, including Australia, the United States of America, and India. The announcement has clarified the Taxation regime for NFT transactions treated as Income or Capital Gains to be considered under regular tax brackets in Singapore. On the other hand, India has taken a different approach with a proposed higher tax bracket of 30% for any Crypto and NFT transactions.
Blockchain-based NFTs serve as tokenized cryptographic assets to represent ownership of unique items. The acceptance of crypto is growing globally within the mainstream. Also, NFTs gained prominence from the end of 2020 and took a significant leap in 2021 with a transaction volume estimated at $41 Billion.
Singapore has one of the lowest income tax rates in Asia. The country offers several tax breaks and boasts a relatively lower corporate tax rate and top personal tax bracket, plus it does not levy taxes on capital gains. However, the country has plans to raise income taxes for the high earners.
