The Office of Commissioner for Revenue has recently issued three guidelines relating to the taxation of transactions involving Distributed Ledger Technology Assets (“DLT Assets”). The guidelines provide insight on the Commissioner’s position in relation to income tax, stamp duty and value added tax.
The guidelines adopt a streamline definition of coins and tokens. Coins are described as those DLT Assets that may be used as a means of payment, medium of exchange or store of value. Tokens are further sub-categorised into;
Financial tokens, which refer to those DLT Assets which, in substance, have similar qualities to financial instruments; or
Utility Tokens, whose utility, value or application is restricted to the acquisition of goods or services; or
Hybrid Tokens, which are tokens which have characteristics of both financial and utility tokens.
Notwithstanding the above, the guidelines clarify that the tax treatment ultimately depends on the purpose and the context in which it is used. It is also made clear that the tax treatment applied shall at all times be in accordance with the existing jurisprudence, established principles, and the applicable law.
Please feel free to contact us for more information on the guidelines.