According to Singapore’s Finance Minister Lawrence Wong, income from NFT trading will be subject to existing income tax laws.
The minister made the disclosure in a Friday speech in parliament, the Business Times reported.
The finance minister explained that the tax rules will apply to individuals who earn income from NFT transactions and not those who earn capital gains from NFT trading. Particularly, Singapore does not have a capital gains tax regime, and as such no tax will be levied on capital gains.
However, individuals who engage in NFT trading as full-time jobs will be taxed as they would for income. The Inland Revenue Authority of Singapore will use a number of parameters to determine whether or not an individual is earning from NFT transactions, such as the nature of the asset, the holding period, intent of purchase, volume of transactions, and reasons for sell-off.
Regulators are increasingly expanding their oversight into cryptocurrencies. In the US and Australia, taxes are already being levied on cryptocurrency and NFT transactions. In Australia, for example, traders are required to pay taxes from the revenue generated from profitable NFT transactions. The country also charges capital gains tax when the asset is sold off.
Meanwhile, in the US, the Internal Revenue Service views digital assets as property for the purpose of taxation. Capital gains or losses must also be accounted for if a cryptocurrency is converted to fiat.
Similarly, the US Securities and Exchange Commission recently revealed that it was investigating “certain nonfungible tokens… [that] are being utilized to raise money like traditional securities.”