Hong kong bitcoin tax

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In Hong Kong, there is no such thing as Capital Gain Tax, therefore, investors who buy and sell financial investments and net a profit need not pay tax on the sale of said assets. Applicable taxes differ depending on the activities and nature of the cryptocurrency. In November of , the Securities and Futures Commission SFC announced a consultation period for a new, far more stringent, regulatory regime for cryptocurrency exchanges. This consultation period ends on January 31, Prior to this, only exchanges selling Security Tokens crypto assets viewed as similar in the eyes of the SFC to financial securities or futures products needed to apply for a licence.

Cryptocurrency mining in Hong Kong is not an illegal activity, but may rather be regulated under data centre laws if the activity is conducted on a large scale.


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  • Hong Kong Bitcoin Taxation!

Because land in Hong Kong is scarce land prices in Hong Kong are some of the most expensive in the world , there are various land use rights around running data centres, and any who are set on operating a cryptocurrency mining centre should bear these in mind unless they are running a smaller-scale operation. To operate a large or industrial-scale, miners must ensure that the building they are operating in is in compliance with the Buildings Energy Efficiency Ordinance, a legal statute passed in respect to intensive electric power needs cryptocurrency mining is typically conducted by ASIC computers.

It is an open question whether a deferral in vesting is sufficient to push back the time of derivation of a pre-mine allocation for Singapore income tax purposes.

Blockchain Laws and Regulations | Hong Kong | GLI

There is an argument based on general principles that the income has not been derived until the tokens have vested. Selecting the most appropriate point of derivation is important as it will determine both the value of the tokens at the time that they are derived, and potentially which YA the income falls into. A similar analysis applies to option agreements over pre-mined tokens.

In considering the taxation of promoters, a potential crucial issue is the ownership of a foreign token-issuing entity. If a promotor is taken to own or control a token-issuing entity in another jurisdiction then there is a risk that the entire proceeds of the token raise may be taxable in their hands. This could be the result even though they may have no ability to access the proceeds of the token issue.

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Blockchain players wishing to conduct ICOs out of Singapore will need to bear in mind several tax considerations. In addition to obtaining legal advice from a regulatory perspective, an issuer should also seek specialist advice to ensure that its token offering is efficient from a tax perspective. Because this is all so new, token issuers based in Singapore have yet to run through a compliance cycle and have their structures subject to the scrutiny of auditors and the IRAS.


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Structures which have not been carefully analysed in advance could lead to an unpleasant surprise. Save my name, email, and website in this browser for the next time I comment. For interviews with thought leaders like Stephane? Please visit our podcast page on www. Often when reviewing. We have been working with more and more International Investors recently.

So we have had many conversations about structures and the advantages of certain jurisdictions. The IRS and Treasury Department have announced a federal tax filing and payment deadline extension for individual filers. Individuals can now file and pay any balance. Digital nomadism is often associated with remote workers looking for jurisdictions that offer a lower cost of living. Our clients however, often pursue quality of. By continuing to use this website, you consent to the use of cookies in accordance with our Cookie Policy.

Interesting Jurisdictions. Real Estate Investment. Tax Planning. Online Selling. Crypto and Taxes in Singapore. Utility tokens are simply app coins or user tokens. They enable future access to the products or services offered by a company. Therefore, utility tokens are not created to be an investment. Just like an electronics dealer might accept orders for a video game that will be released several months later, a startup can create utility tokens and sell digital coupons for the services or products it is developing.

These tokens will allow users access to its decentralized cloud storage platform.

Taxing digital assets in Hong Kong

Payment tokens have no other purpose than to pay for goods and services. Securities tokens describe many of the tokens issued by ICO. Buyers are investing their money in the ICO with the expectation of profit.

Henry Yu - SFC regulations and Bitcoin (Hong Kong crypto exchanges)

More on this in the section below. Virtual Currencies as Mode of Payment Generally, businesses that accept virtual currencies as payment for goods or services should record the sale based on the open market value of the goods or services in Singapore dollars.

Tax Alert - February 2018

Trading in Virtual Currencies Businesses that buy and sell virtual currencies in the ordinary course of their business will be taxed on the profit derived from trading in the virtual currency. Timing of taxation of ICO proceeds The potential upfront taxation of token proceeds is made worse by a potential timing mismatch. Conclusion Blockchain players wishing to conduct ICOs out of Singapore will need to bear in mind several tax considerations.

Share on facebook Facebook. Share on twitter Twitter. Share on pinterest Pinterest. Share on linkedin LinkedIn. Leave a Reply Cancel reply Comment. Enter your name or username to comment. Enter your email address to comment. Enter your website URL optional. Related Sites. If you found a bitcoin under the Christmas tree, should you be worried about tax a bill? Bitcoin experienced explosive growth in value in the period leading up to Christmas followed by a quick and large loss of value almost two thirds in the early part of , and this naturally raises questions of how revenue authorities should be taxing cryptocurrencies generally.

In terms of legal status, the Financial Markets Authority considers that cryptocurrencies are not legal tender and this is the same around the world. Rather, most cryptocurrencies are intrinsic tokens i. The correct tax treatment will depend on the characteristics of the currency. Inland Revenue have indicated that it is likely to take the view that intrinsic token type cryptocurrencies are property and should be treated in the same way as gold bullion — ie, in almost all circumstances it will be acquired for the purpose of disposal refer to our October Tax Alert for a brief summary of the Inland Revenue view on gold bullion.

The alternative way of taxing cryptocurrency would be to treat it as a financial arrangement, akin to currency, which, depending on the value of the cryptocurrency held, could mean that unrealised gains are taxable. Other countries are also grappling with the right way to tax cryptocurrencies. In the United States, the IRS has released guidance that cryptocurrency is property when held on capital account, and gains are subject to capital gains tax.