S’poreans who earn via NFT transactions or tradings will soon have to pay income tax for it

Individuals who derive income from non-fungible token (NFT) transactions or from trading in NFTs will have “prevailing income tax rules” applied to them.

Finance Minister Lawrence Wong said in a Parliamentary reply to Yio Chu Kang SMC Member of Parliament Yip Hon Weng that the income tax treatment “will be determined based on the nature and use of the NFT.”

The income tax rules will apply to transactions of NFTs. NFTs are tokens that are used to represent ownership of unique items. Things that can be tokenised on the blockchain include art and collectibles.

Even though the individuals may also derive capital gains from the NFT transactions, Mr Wong said that as Singapore does not have a capital gains tax regime, such gains will not be taxable.

Recent tax reforms to support country’s needs

The update comes amid recent finetuned tax reforms to support longer-term spending and to boost revenues to aid the country’s growing healthcare needs.

The country raised the personal income tax of top earners with chargeable income above S$500,000 during Budget this year, with effect from the 2024 year of assessment.

The portion of chargeable income in excess of S$500,000 up to S$1 million will be taxed at 23 per cent, while those in excess of S$1 million will be taxed 24 per cent. This represents a one percentage point and two percentage point increase from the current 22 per cent rate.

The national goods and services tax (GST) will also be raised to eight per cent in 2023 and nine per cent in 2024, from the current seven per cent.

Featured Image Credit: Bloomberg, Luna Kiddy