One major headache of an ICO has always been how to mange the tax burden of the proceeds. If not managed properly, an entity not only faces an income tax charge upfront of the entire proceeds that is meant to fund a few years of development, but also reverse charge on GST on the proceeds if the stipulated threshold are met (assuming the customer was not charged GST on the onset during the sale of tokens).
Truth be told, GST is not an easy area to navigate for ICOs and one which most entities fail to address before the launch. So its great to see that IRAS has come up with a draft e-tax guide on GST on Digital Payment Tokens, In this guide, IRAS also address some of the more complicated issues (e.g. determining belonging status of customers).
Key takeaways from the proposed changes :
A helpful summary of the changes can be found in Appendix A of the guide.
IRAS is also currently inviting feedback on these changes and we urge all stakeholders to weigh in on these changes as soon as possible.