Publication Type

Journal Article

Version

acceptedVersion

Publication Date

9-2022

Abstract

When digital tokens are used in debt finance, one cannot assume that the same orthodox tax treatment will apply. The highly specific nature of tax provisions means that they may apply very differently once digital tokens rather than fiat currency are involved. Through a case study of Singapore law, this article shows that if debt finance transactions involving digital tokens are not carefully structured, there may be severe tax consequences, including the inability to deduct borrowing costs or benefit from common tax incentives, and the possible incurrence of additional tax liabilities. This article submits that, under Singapore tax law, it may be difficult to argue that digital tokens are in fact “money”, whether they be digital payment tokens and/or asset-backed tokens. It highlights potential differences between situations where digital tokens are the assets being loaned, used to pay for borrowing costs, or used as a medium of recording the transaction.

Keywords

Digital Tokens, Crypto, Taxation, Capital Markets, Singapore Taxation

Discipline

Banking and Finance Law | Tax Law

Research Areas

Innovation, Technology and the Law; Corporate, Finance and Securities Law

Publication

Capital Markets Law Journal

Volume

17

Issue

4

First Page

1

Last Page

19

ISSN

1750-7219

Identifier

10.1093/cmlj/kmac020

Publisher

Oxford University Press (OUP): Policy E - Oxford Open Option D

Additional URL

https://doi.org/10.1093/cmlj/kmac020

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