Forex and taxes is a very relevant topic today, especially for the law-abiding citizens who get high profits from Forex trading on a regular basis. Most of the trading companies and Forex brokers that provide trading services to their clients don’t have any tax agency.
In other words, most of the Forex brokers do not make any tax deductions from funds gained by a trader in the Forex market. The trading companies leave this responsibility to a trader to pay income taxes according to the law of his/her country of residence. Each country has its own law of income taxes for the funds gained by trading on the financial markets.
Forex profits in Singapore are tax free. This is a great advantage of trading Forex in Singapore. Singapore government doesn’t charge any taxes from the citizens who have an extra income from abroad received on trading in the financial markets (shares, futures, Forex, etc). But if Forex trading is your main and only source of income in Singapore you will be required to declare it and pay some taxes.
Those traders who live in the country where the citizens must pay the taxes for the Forex income, they must keep a record of profits and losses of their Forex trading. Thus the traders can calculate and pay tax on the profits in accordance to the law of the income tax of the country they live in.
Practically the question of Forex taxes income depends on how you withdraw funds from your account. If you use an international electronic payment systems (eg, Webmoney, Paypal or Moneybookers), you don’t have to report the government about your income as it doesn’t have any ways to find out about it as long as your funds are kept there. If you decide to transfer your profits to your local bank account you will be able to report the income and pay taxes.
Some Forex brokers offer their clients a solution to avoid taxes on their Forex profits by receiving a debit card registered in an offshore bank. Such card is loaded by the profits you earn in Forex and you can use it as a credit card in your country or withdraw money at any ATM. However, sometimes such cards have a monthly limit for a withdrawal amount.