Singapore is providing some clear guidance on how merchants can manage taxation on Bitcoin transactions.

This is a step ahead of most governments, which have yet to issue clear regulations around the new alternative payment. Even many financial corporations have held it at arm’s length: PayPal president David Marcus recently found himself in a small firestorm of controversy when he said that people are mistaken for thinking Bitcoin is a currency.

CoinRepublic, a Singapore-based news site and brokering service, originally reported the news after it received a copy of an email sent to The Inland Revenue Authority of Singapore (IRAS). The Singapore government is reportedly offering guidance on how merchants can handle capital gains, earnings, and even sales tax (also known as a goods and services tax, or GST) on Bitcoin exchanges and Bitcoin-related sales.

CoinRepublic founder David Moskowitz believes the guidance is a step in the right direction. He said: “The guidance which IRAS laid out is rational and well thought out. As a business owner I can clearly account for my earnings on Bitcoin trades for my clients and my own positions and pay the proper taxes.”

Most interesting is that Bitcoin will not be considered a “currency” or a form of “money” under the GST Act — so in that respect, Singapore agrees with Paypal’s Marcus. Instead, the government considers it a “supply of services” as “it involves the granting of the interest in or right over the Bitcoins.”

“If the seller is a GST-registered person, he would have to account for output tax on the sale of Bitcoins made in the course or furtherance of his business,” the letter reads.

Here’s a summary of that email from IRAS: