How is forex trading taxed in Singapore?
Forex is one of the largest markets in the world. Here’s some important information about the tax you’ll pay when trading forex in Singapore.
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Contact us: +65 6390 5133
Start trading today. Call +65 6390 5133 between 9am and 6pm (SGT) on weekdays or email accountopening@ig.com.sg for account opening enquiries.
Contact us: +65 6390 5133
What is forex trading?
Forex trading refers to the conversion of one currency to another in the hope of making a profit. For example, if you believe the pound (GBP) will strengthen in value compared to the US dollar (USD), you could sell some dollars in exchange for pounds with the view of buying back those dollars at a later date, hopefully at a lower price.
Currencies are always traded in pairs, so when you buy one (base currency) you sell another (quote currency).
Forex is the world’s largest financial market. With no centralised exchange, it’s very accessible and most major currency pairs can be traded around the clock, so you can get exposure to rising and falling currency values at a time that’s convenient for you.
It’s worth noting, however, that the forex market is often volatile and while this creates trading opportunities, it also exposes you to greater risk so you could gain or lose money faster than expected.
How is forex trading taxed in the Singapore?
How forex trading is taxed depends on the instrument you choose to trade it with. With us, you can trade forex using contracts for difference (CFDs).
With CFD trading, you won’t have to pay stamp duty as you don’t own the underlying asset.
It's important to note however, that tax laws are subject to change and differ depending on individual circumstances and the country you live in.
Please note that we don’t offer any tax advice to our clients. If this is a service that you’d like, we recommend consulting with a tax advisor to discuss your personal circumstances.
| CFD trading on forex | |
|---|---|
| Ownership of asset | No ownership |
| Stamp duty | No stamp duty payable1 |
Forex trading tax example
Here’s an example of trading forex via CFDs in Singapore. Your position is based on the assumption that you believe that the pound will rise against the US dollar.
If you believe that GBP will rise against USD and you decide to buy GBP/USD, this means you’ll profit if the pound does rise against the dollar.
| CFD trading example | |
|---|---|
| Exchange rate | GBP/USD 1.2732 £1 = $1.127321 |
| Cost to open and close | 0.9 (spread) |
| Sell/ buy prices | 1.27317/1.27326 |
| Deal | Buy (go long on) GBP/USD |
| Margin factor | 3.33% |
| Initial outlay | $4239.96 You buy 100,000 GBP/USD CFDs with a contract value of $10. 100,000 x 1.27326 x 3.33% margin factor = 4239.96 |
| Stamp duty | None |
* Table updated August 2023
Extra things to know about FX trading
- Go long or short – when trading with CFDs you can go long (buy) or short (sell), providing you with exposure to rising and falling markets
- Trade 24/5 on all major currency pairs – with us, you can trade forex from 4am Monday to 5am Saturday (SG time). These hours may vary as different countries move to daylight savings
- Take your capital further with leverage – to open a position, you put down an initial deposit which is a fraction of your total trade value and gain greater exposure to the markets. Please note that trading with leverage comes with increased complexity and risk as any potential profits or losses are magnified to the full value of the trade. You could even lose more than your initial deposit. Because of this, it’s important to constantly monitor your position and take steps to manage your risk
- Trade spot, forwards and options – use a CFD trading account and choose to trade spot, futures or options. This means you can either trade using the price of the underlying market or a predetermined price set for some future date
FAQs
What tax do you pay on forex trading?
When trading forex with derivatives like CFDs, you’re not required to pay stamp duty as you don’t own the underlying asset.
Please note that the kind of tax you’ll have to pay also will depend on personal circumstances and the instrument with which you choose to trade. So, it’s important to check on both factors to get an accurate view of the tax implications relevant to you. If you’re unsure, you can check with a tax advisor.
What instruments can you use to trade forex with us in Singapore?
You can trade forex with us via CFDs. This means you can take a position on the price movement of specific currency pairs by going long or short without owning the underlying asset.
It’s important to note that CFDs are leveraged products, meaning you can open a position much larger than your initial margin. In doing so, you have greater exposure to the market, but this comes with an increased risk as both potential profits and losses are magnified to the full trade value, so you could lose more than your initial outlay.
Try these next
Trade up to 13,000 markets with contracts for difference
Trade a wide range of currency pairs with Singapore’s No. 1 CFD/FX broker2
Choose to trade on a browser based-desktop, mobile app or a third-party program
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1 |
Tax laws are subject to change and depend on individual circumstances. Tax law may differ in a jurisdiction other than Singapore. |
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2 |
By total number of client relationships. Investment Trends 2022 Singapore Leverage Trading Report. |
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