According to an income tax treatment guide, Singapore’s tax authority will not take a cut of cryptocurrency airdrops and hard forks as long as the receiver gets it for free.

The new e-tax guide published by the Inland Revenue Authority of Singapore (IRAS) filled the tax gaps for so-called “digital tokens,” a catchall for three types of cryptography: payment tokens used to by goods and services; utility tokens representing a right to goods and services; and security tokens, or digital securities. Each has a new IRA definition and tax treatment accordingly

The guide, intended as a guide for consumers and businesses, as well as for ICO issuers, describes a fragmented approach for an industry that is still taking shape.

The tax guide also clarified procedures for other obscure events involving cryptos. For instance, IRAS will not levy income taxes on airdropped payment tokens or those coming from a hard fork blockchain, which is a “windfall.” Like other payment tokens, non-traditionally delivered cryptos will still be taxable on transactions.

IRAS ‘guide takes the view that payment tokens such as bitcoin are “intangible property” rather than legal tender. When a consumer pays in bitcoin he engages in “barter trade” for which the goods and services are taxed, not the payment token itself. The same goes for companies that can presumably value the tax burden of their goods against money metrics issued by the government.

Where things get tricky, determines the tax burden of a good or service whose value is represented natively in crypto. For example, a contractor who agrees to do a job for 3 bitcoins does not have a surefire to calculate the tax, because the IRAS does not have any “methodology to value payment tokens.”

Therefore, the IRAS mandates that taxpayers self-determine a “reasonable and verifiable” exchange rate from services such as Coinbase and Binance, widely available.

Conversely, utility token transactions are “unlikely” to trigger a taxable event for the user, whose acquisition of them as a right to future services “will be treated as prepayment.” Actually, use of utility tokens will be a deductible event under the guide.

Security tokens operate under the same loose tax laws as the tax haven for other securities applies to Asia. Singapore levies no capital gains tax on securities of any kind, and taxes dividends sparingly depending on the issuer, leaving security tokens taxable only when classified as “revenue assets.”

The investor-friendly tax scheme in Singapore leaves issuers of ICO security tokens with their entire capital raise. ICOs that issue utility tokens aren’t so happy. Their proceeds are effectively deferred income which is taxable as soon as the goods are delivered. ICO issuers need to pay for payment token immediately, though the guide said such schemes are “uncommon.”

“An examination of the case facts may be required” for payment token ICOs, the guide said.

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