Singapore and Israel Tax Authorities Apply Tax to Profits from NFT Transactions

Singapore will apply an income tax while Israel will apply capital gains tax.
Image source: DepositPhotos

Quick take:

  • Singapore will apply an income tax to NFTs for individuals who draw an income from NFT trading.
  • Israel will apply a 25% capital gains tax to profits from NFTs.
  • In February, Singapore said it would not be regulating NFTs “for now” while NFTs may be deemed securities under Israeli Security Authority’s new guidelines.

Singapore’s finance minister Lawrence Wong said in parliament today that the country’s prevailing income tax rules will apply to those who derive income from NFT transactions or trading.

Wong added that the income tax treatment “will be determined based on the nature and use of the NFT”, and acknowledged that individuals may draw capital gains from NFT transactions. However, such gains will not be taxable as Singapore does not have a capital gains tax law.

This comes after Singapore said in February that it would not be regulating NFTs “for now”.

In other related news, the head of Israel’s tax authority, Eran Yaakov, noted at a Bitcoin Association conference held on Thursday in Tel Aviv that a 25% capital gains tax will apply to NFT profits, like other cryptocurrencies, as soon as the NFT is sold or converted.

In February, the Israeli Security Authority issued a memorandum with new guidelines on public offerings. 

The memorandum addressed various investment schemes offered to the public, noting that real estate that is purchased as part of a development project and includes a management agreement promising rental income, a buy-back clause and an extension clause is considered a security.

While the memorandum did not mention NFTs, projects with investors and backers that fail the Howey Test would likely be deemed securities.

India announced a 30% capital gains tax on virtual assets in February as the country plans to launch a digital version of the rupee by next year.

Other countries that have applied tax to NFT and cryptocurrency transactions include Australia, and United States. Australia taxes income on profit made from NFTs. In the United States, capital gains tax ranging from 0% to 20% depending on total income applies upon the sale of cryptocurrency to fiat. 

South Korea planned to impose a 20% capital gains tax on crypto profits over $2000 generated in a one-year period, starting Jan 1, 2022. However, it was postponed to 2023. Newly elected pro-crypto president, Yoon Suk-yeol, pledged to raise the country’s capital gains tax threshold from $2,000 to $40,000 during his election campaign.

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