Written by: Xie Yancen

Terminology Reference Table

Scope of Research

This report systematically organizes the tax rules regarding digital assets in Singapore from 2020 to the present. We have analyzed various electronic tax guidelines published by the Inland Revenue Authority of Singapore (IRAS), regulatory documents issued by the Monetary Authority of Singapore (MAS), as well as the implementation of international cooperation frameworks (such as CARF), in hopes of providing readers with a comprehensive and clear regulatory landscape.

Core Conclusions

Looking back at the developments over the past few years, Singapore's regulatory framework for digital asset taxation has followed a clear path: first establishing the basic principles for tax treatment of digital assets through GST rules and income tax guidelines in 2020, then gradually improving the tax treatment details for various trading scenarios, followed by achieving international tax compliance through CRS 2.0 and the CARF framework, and finally clarifying the tax treatment of emerging digital assets such as RWAs through the third edition of the income tax guidelines in 2026. Overall, Singapore's regulatory policy centers on "exempting capital gains from tax and taxing business profits," while also focusing on international cooperation and information transparency, providing a relatively clear and predictable tax environment for the digital asset industry.

Chapter Two: Tax Classification of Digital Assets in Singapore

2.1 Legal Definitions

The definition of digital assets in Singapore is primarily reflected in the following documents:

In the IRAS "GST: Digital Payment Tokens" (January 2020, e-Tax Guide No. GST/EXP/01), "Digital Payment Tokens (DPT)" are defined as:

Original Quote: "A digital payment token (DPT) is a digital representation of value that is expressed as a unit of account, is transferable, is stored or traded electronically, and is accepted by the public as a medium of exchange."

English Translation: "A digital representation of value that is transferred, stored, or traded electronically, used or intended to be used as a medium of exchange accepted by the public, and has no other functions or is not linked to any other asset or service."

In the IRAS "Income Tax Treatment of Digital Tokens" (first edition April 2020), digital tokens are classified into three categories:

• Payment tokens: Digital tokens primarily used as a medium of exchange, such as Bitcoin, Ethereum, etc.;
• Utility tokens: Digital tokens that provide access to specific products or services;
• Security tokens: Digital tokens representing ownership of assets, revenues, or equity.

In the IRAS "CARF Overview and Latest Developments" (December 2024), crypto assets encompass virtual currencies (such as Bitcoin, Ethereum), stablecoins, NFTs, and other tradable crypto assets, but do not include central bank digital currencies (CBDCs).

2.2 Boundaries with Other Assets

In terms of tax treatment, the attributes of digital assets have two clear boundaries: First, digital assets are not legal tender; second, tax treatment is differentiated based on the nature of the transaction, where profits from sales of assets held for long-term investment are considered capital gains (tax-exempt), while profits from frequent trading are regarded as business profits (taxable).

IRAS "GST: Digital Payment Tokens" (January 2020, e-Tax Guide No. GST/EXP/01), section "Nature of Digital Payment Tokens":

Original Quote: "Digital payment tokens are not legal tender in Singapore, and their tax treatment does not apply special rules for currency transactions; at the same time, the core of tax determination for digital asset transfer income is to distinguish between capital gains and business profits, which applies to all digital asset types."

English Translation: "Digital payment tokens are not legal tender in Singapore, and their tax treatment does not apply special rules for currency transactions; at the same time, the core of tax determination for digital asset transfer income is to distinguish between capital gains and business profits, which applies to all digital asset types."

2.3 Practical Standards for Tax Determination

Core indicators for tax determination by IRAS:

Transaction Frequency: If the number of transactions exceeds 10 times a year or the transaction amount exceeds SGD 100,000, it may be recognized as "frequent trading";

Holding Period: Transactions involving digital assets held for less than one year are more likely to be recognized as business profits; transactions for assets held over one year with no frequent trading record are more likely to be recognized as long-term investments;

Trading Strategy: Whether a detailed trading plan is established, whether algorithms or automated tools are used for trading;

Resource Investment: Whether there are dedicated personnel, fixed locations, or substantial equipment investments;

Revenue Proportion: Whether the income from digital asset trading constitutes the primary source of income;

Trading Model: Whether there is a consistent trading model, such as high-frequency trading, arbitrage trading, etc.

IRAS public case reference: In a 2024 case, IRAS determined that an investor conducted 15 Bitcoin transactions within 12 months, with a total transaction amount exceeding SGD 150,000, and had a clear trading strategy, ultimately determining that their trading profits were business profits subject to income tax.

2.4 Classification of Tax Attributes

2.4.1 Payment Tokens (e.g., Bitcoin BTC, Ethereum ETH, etc.)

The core tax treatment for payment tokens lies in distinguishing the nature of trading. If held for long-term investment and not frequently bought or sold, profits from sales are classified as capital asset appreciation, and due to Singapore's absence of capital gains tax, no income tax is due; if frequently traded for profit, relevant profits are considered business profits and must be taxed according to corporate or personal income tax regulations.

IRAS "Income Tax Treatment of Digital Tokens" (April 2020), section "Tax Treatment of Payment Tokens" clearly states:

Original Quote: "If a taxpayer holds payment tokens for long-term investment purposes, the profits from the sale are capital gains and are not subject to income tax in Singapore. If the tokens are traded frequently for profit, the profits are considered trading profits and are subject to income tax under the Income Tax Act."

English Translation: "If a taxpayer holds payment tokens for long-term investment purposes, the profits from the sale are capital gains and are not subject to income tax in Singapore. If the tokens are traded frequently for profit, the profits are considered trading profits and are subject to income tax under the Income Tax Act."

2.4.2 Utility Tokens

The tax treatment of utility tokens depends on their specific functions. If utility tokens are held as long-term investments, profits from sales are capital gains, exempt from income tax; however, if frequently traded for profit, related profits are viewed as business profits and taxed according to relevant income tax regulations.

Utility token determination example: A token issued by a project party that can only be exchanged for platform services, if a user purchases and holds it long-term for access to platform services, profits from sales would be classified as capital gains, exempt from income tax; if the user frequently trades the token for profit, related profits would be considered business profits, subject to income tax regulations.

IRAS "Income Tax Treatment of Digital Tokens" (April 2020), section "Tax Treatment of Utility Tokens":

Original Quote: "The tax treatment of utility tokens is consistent with payment tokens, with the core being the distinction between long-term investment and frequent trading."

English Translation: "The tax treatment of utility tokens is consistent with payment tokens, with the core being the distinction between long-term investment and frequent trading."

2.4.3 Security Tokens

The tax treatment of security tokens applies the "piercing principle," requiring penetration to the underlying assets, with tax treatment determined by the nature of those assets. For example, security tokens representing equity would have tax treatment akin to traditional equity; security tokens representing bonds would have interest income taxed according to interest income regulations.

IRAS "Income Tax Treatment of Digital Tokens" (January 2026), section "Tax Treatment of Security Tokens":

Original Quote: "The tax treatment of security tokens requires piercing to the underlying assets, and the taxable behavior and tax rate are determined based on the nature of the underlying assets."

English Translation: "The tax treatment of security tokens requires piercing to the underlying assets, with the taxable behavior and tax rate determined based on the nature of the underlying assets."

2.4.4 Stablecoins (e.g., USDC, USDT, etc.)

The tax treatment for stablecoins is determined per the "functional penetration" principle:

Pure payment-type fiat stablecoins (e.g., USDT, USDC with no interest-bearing function): classified as DPT, exempt from GST at the supply stage, with profits from sale/exchange divided into "capital gains (tax exempt)/business profits (taxable)";

Interest-bearing fiat stablecoins: penetrate to the underlying fiat deposits, with interest income taxed as "interest income" according to the Income Tax Act, while the principal remains treated per DPT rules;

Stablecoins linked to securities' returns: classified as security tokens, treated per the tax rules of the underlying securities;

Algorithmic stablecoins: generally classified as DPT;

Digital asset collateral stablecoins: categorized based on the nature of their underlying assets;

Other types of stablecoins: treated according to their functions and characteristics.

IRAS "GST: Digital Payment Tokens" (January 2020, e-Tax Guide No. GST/EXP/01), section "Treatment of Stablecoins":

Original Quote: "If stablecoins meet the definition of DPT, their supply (sale of DPT) is exempt from GST; when using DPT to pay for goods or services, it needs to be dismantled into two links: 'selling DPT' and 'purchasing goods or services', where 'selling DPT' is exempt from GST, and 'purchasing goods or services' is subject to regular GST rules; if they do not meet the definition of DPT, they are subject to corresponding tax rules based on their specific nature."

English Translation: "If stablecoins meet the definition of DPT, their supply (sale of DPT) is exempt from GST; when using DPT to pay for goods/services, it needs to be dismantled into two links: 'selling DPT' and 'purchasing goods/services', where 'selling DPT' is exempt from GST and 'purchasing goods/services' is subject to regular GST rules; if they do not meet the definition of DPT, they are subject to corresponding tax rules based on their specific nature."

"GST and Income Tax FAQ Update" (June 2022 version):

Original Quote: "Stablecoins are classified based on their nature and characteristics, with algorithmic stablecoins treated as DPTs and fiat-backed stablecoins classified based on their specific features."

English Translation: "Stablecoins are classified based on their nature and characteristics, with algorithmic stablecoins treated as DPTs and fiat-backed stablecoins classified based on their specific features."

2.4.5 NFT (Non-Fungible Tokens)

The core determining dimensions for the tax treatment of NFTs are "holding purpose" and "trading frequency," not the type of NFT:

Regardless of whether collectible or commercially issued NFTs, if held for long-term investment (with no frequent trading actions), profits from sales are classified as capital gains, exempt from income tax;

If NFTs are frequently traded for profit (including collectible NFTs), the related profits are treated as business profits, subject to income tax regulations;

For issuers of commercial NFTs, revenue from issuance is taxed as "business profits" (regardless of trading frequency).

"Digital Assets Tax FAQ" (first edition March 2021):

Original Quote: "The core of NFT tax treatment lies in distinguishing the purpose of holding, with collectible NFTs treated as capital gains and commercial/trading NFTs treated as business profits."

English Translation: "The core of NFT tax treatment lies in distinguishing the purpose of holding, with collectible NFTs treated as capital gains and commercial/trading NFTs treated as business profits."

"GST and Income Tax FAQ Update" (June 2022 version):

Original Quote: "Collectible NFTs held for long-term investment are treated as capital assets, while NFTs issued for commercial purposes or frequently traded are treated as trading stock."

English Translation: "Collectible NFTs held for long-term investment are treated as capital assets, while NFTs issued for commercial purposes or frequently traded are treated as trading stock."

2.4.6 RWA (Real World Assets) Tokenization

The tax treatment of RWA tokenized assets applies the "piercing principle," which requires penetration to the underlying assets, with tax arrangements determined based on the nature of those assets. For instance, the tax treatment of tokenized real estate aligns with traditional real estate; the interest income from tokenized bonds must be taxed according to interest income regulations.

Typical scenarios for RWA tokenization:

Tokenized real estate: rental income is taxed according to real estate leasing income (17% for corporations, progressive tax rates for individuals), and profits from sales are treated as capital gains (tax-exempt) or business profits (taxable).

Tokenized private equity: dividends are treated according to dividend income regulations (tax-exempt for Singapore resident corporations and individuals, 15% withholding tax for non-residents), and profits from sales are treated as capital gains or business profits.

Tokenized bonds: interest income is treated according to interest income regulations (17% for corporations, progressive tax rates for individuals, 15% withholding tax for non-residents).

Differences in tax treatment between traditional RWA and tokenized RWA:

Transaction Costs: The transaction costs of tokenized RWA are generally lower than traditional RWA, but the tax treatment principles remain consistent.

Cross-Border Transactions: Cross-border transactions of tokenized RWA are more convenient, but still need to comply with the source country's tax regulations.

Liquidity: Tokenized RWA have higher liquidity, which may increase trading frequency, thus affecting the determination between "capital gains vs. business profits."

Special tax treatment of DAO participation in RWA tokenization:

Tax subject determination for DAOs: if a DAO is registered as a corporate entity in Singapore, it must pay taxes as an independent tax subject; if it is a decentralized organization, it might be viewed as a partnership or a collective of individuals, with tax responsibilities borne by the participants.

DAO profit distribution: if the profit distribution of a DAO is deemed as dividends, Singapore resident businesses and individuals may enjoy tax exemptions; if deemed as service fees, they must be taxed as business profits.

IRAS "Income Tax Treatment of Digital Tokens" (January 2026), section "Tax Treatment of RWA Tokenized Assets":

Original Quote: "The tax treatment of RWA tokenized assets requires piercing to the underlying assets, with tax attributed to the underlying assets, consistent with the tax treatment of traditional assets."

English Translation: "The tax treatment of RWA tokenized assets requires piercing to the underlying assets, with tax attributed to the underlying assets, consistent with the tax treatment of traditional assets."

2.5 Summary

This chapter detailed the tax classification system for digital assets in Singapore, including legal definitions, boundaries with other assets, practical standards for tax determination, and classification of tax attributes. Core classifications include payment tokens, utility tokens, security tokens, stablecoins, NFTs, and RWA tokenized assets. The tax treatment principles for various digital assets differ:

Payment and utility tokens: core is to distinguish between long-term investments (capital gains tax-exempt) and frequent trading (business profits taxable).

Security tokens: apply the "piercing principle," taxing based on the nature of the underlying assets.

Stablecoins: categorized into DPT or other types according to specific nature, applying respective tax rules.

NFTs: core determining dimensions are "holding purpose" and "trading frequency," not the type of NFT.

RWA tokenized assets: apply the "piercing principle," with tax treatment consistent with underlying assets.

These classification rules provide a foundational framework for the tax treatment of specific trading scenarios, which will be analyzed in detail regarding common digital asset trading scenarios in the following sections.

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