South Africa Introduces New Cryptocurrency Tax Law
South Africa‘s tax authority have urged citizens to report their cryptocurrency gains as part of their taxable income.
The South African Revenue Service (SARS) on Friday released a statement covering South African cryptocurrency tax laws. The statement obliges taxpayers to declare their cryptocurrency gains and losses as part of their capital gains tax as well as any income derived in cryptocurrency as income tax.
In the statement, SARS said:
“The onus is on taxpayers to declare all cryptocurrency-related taxable income in the tax year in which it is received or accrued. Failure to do so could result in interest and penalties.”
The agency explains that while cryptocurrencies are not regarded as a legal tender by the South African government, income accrued from cryptocurrency transactions can be taxed on revenue account under “gross income” as they are regarded as “assets of an intangible nature.”
While SARS has figured out how to deduce tax from cryptocurrencies, they are yet to ascertain the Value-Added Tax (VAT) for cryptocurrencies. In their statement, SARS said: “The 2018 annual budget review indicates that the VAT treatment of cryptocurrencies will be reviewed. Pending policy clarity in this regard, SARS will not require VAT registration as a vendor for purposes of the supply of cryptocurrencies.”
The development comes amid an increased interest on cryptocurrencies by global tax agencies. The SARS had revealed in December last year that it was exploring ways to track and tax cryptocurrency transactions.
The agency also advised South African taxpayers who are not certain about transactions involving digital currencies to seek guidance from SARS’ via channels such as Binding Private Rulings depending on the type of transaction.
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