ICO tax savings through non profit corporation

In the case of ICO in Singapore, there are two legal entities, Private Limited Company and Companies Limited by Guarantee, which will form an actual block chain platform. This structure model is called Foundation – OP model.

Private Limited Company is a for-profit corporation, and Companies Limited by Guarantee is a non-profit corporation.

It is for taxation that it is why the establishment of such a non-profit corporation in Singapore and proceeding with ICO.

If you are going to take the Foundation – OP model, the funds raised through ICO in Singapore will be donated to your CLG contribution, CLG Pte. Ltd, and therefore the movement route is Employee → CLG → Pte. Ltd.

Looking at the taxation of each party, donations to an employee’s CLG are not taxable because they are incomes.

Next, in case of CLG, charity status is recognized as charity. If more than 50% of your total income comes from an employee and your employees do not receive any other tax benefits, you may be eligible for tax deductions.

Therefore, CLG will be eligible for tax relief if an employee contributes the money raised through ICO to CLG and retains the money.

Next, according to the Singapore Company Act, the contribution of CLG to Pte. LTD as a subsidiary of CLG. At this time, CLG’s contribution is Pte. LTD, and Singapore is not taxed on capital gains, so eventually Pte. LTD will be held by Pte. LTD enjoys duty-free benefits.

In other words, if you take the Foundation – OP model, you can build a structure that is not taxed between the parties that send and receive funds.

If Foundation – OP model, not Pte. What if I just use ICO to do it?

The money raised by ICO is Pte. LTD, and shall pay a corporate tax of 17% against future incomes. Considering that the size of the money collected through ICO is large, the tax at the 17% rate will be enormous.
In light of the above, if you are going to ICO in Singapore, you can use Foundation – OP model. However, there is a case where the exemption benefits can not be obtained even under the IMOD, and there are cases where it is necessary to carry out the ICO by using a model other than the Foundation – OP model for each ICO company.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s