Part 4 of « Crypto Taxes around the World”
Like Switzerland, Singapore is one of the world’s leading financial marketplaces. Located in the heart of Asia, this small city-island-nation has proven to be a safe-haven for investors who wish to benefit from favorable tax rates and a high quality of life. Indeed, not only is Singapore extremely business-friendly, it is also one of the most developed nations on Earth.
When it comes to cryptos, Singapore is undoubtedly one of the world’s more favorable tax jurisdictions. Cryptos are considered financial assets like stocks and are thus taxed accordingly:
- Businesses and professional traders who buy and sell cryptocurrencies pay [maximum 22%] income tax on all capital gains
- Capital gains of occasional traders are completely tax exempt
However, you must be a tax resident of Singapore to benefit from the tax-free capital gains policy. To become a tax resident you must apply for a visa or permit and establish your full time residency (minimum 183 days per year) in Singapore.
How to cash out your gains
Singapore has very advantageous tax laws, but it also has very vigilant authorities who seek to prevent tax fraud, tax evasion and money laundering. While you can travel to Singapore and cash out your gains via regulated Singaporean exchanges, failing to declare sums above SGD20K (USD 14K) upon departure is illegal: You would face a maximum fine of USD50K and/or three years in jail.
To cash out your crypto and leave the country legally, you need to declare any sum above SGD20K to authorities by providing a receipt from a registered company in Singapore. You then need to declare the same amount in your home country upon arrival and pay the taxes that would normally be levied for capital gains. This renders the act of cashing out in Singapore pointless.
Why not open a bank account in Singapore?
This is the ideal solution as you could theoretically cash out your gains, leave them on the Singaporean bank account and travel internationally without declaring anything in your home country. However, this is much easier said than done as opening a bank account requires being either a permanent resident of Singapore or a Singaporean Citizen.
To apply for Singaporean residency, you need to find a job, create a business or study in the country. These procedures require providing extensive documentation and having serious intent of living in the country for a prolonged period.
Considering the difficulty of cashing out your crypto tax-free as a non-Singaporean resident, foreigners should perhaps seek alternatives closer to home.
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