South Africa Sheds Light on Crypto Earning Taxes

Cryptovest

Published Apr 10, 2018 04:39AM ET

Updated Apr 10, 2018 05:01AM ET

South Africa Sheds Light on Crypto Earning Taxes

The South African Revenue Service (SARS) will not be creating new tax rules for digital currencies but wants all earnings and losses from cryptocurrencies to be reported as assets under existing regulations.

In a statement posted on its website, SARS said that virtual currencies would be treated as "assets of an intangible nature" rather than traditional fiat currencies and would be subjected to existing capital gains and income tax rules as stated in the Income Tax Act.

SARS said:

“Whilst not constituting cash, cryptocurrencies can be valued to ascertain an amount received or accrued as envisaged in the definition of ‘gross income’ in the Act. Following normal income tax rules, income received or accrued from cryptocurrency transactions can be taxed on revenue account under ‘gross income’.”

“Alternatively such gains may be regarded as capital in nature, as spelled out in the Eighth Schedule to the Act for taxation under the capital gains tax paradigm.”

The tax agency said it expected all affected taxpayers in the region to declare any gains or losses arising from cryptocurrencies as part of their taxable income.

h2 Three scenarios for cryptocurrencies to gain or lose/h2

SARS listed three scenarios for posting cryptocurrency gains or losses. These are:

  1. Digital currencies acquired through mining operations are considered "held as trading stock" until the user decides to barter or trade them for fiat currencies. Once bartered, the cryptocurrency would fall under the succeeding scenarios.
  2. Digital assets can be exchanged for local currency (or vice versa) by using cryptocurrency exchange platforms or through private transactions.
  3. “Normal barter transaction rules apply” when investors exchange a cryptocurrency either for goods or services.

The tax agency said it was still reviewing rules on how to apply value-added tax (VAT) on digital assets. Until such time, SARS said it would not require VAT registration for vendors that supply digital currencies.

h2 Countries taxing cryptocurrencies/h2

South Africa’s clarification on crypto tax comes after several countries have already drafted their own tax rules on digital assets.

Last week, Thailand said it was looking for ways to implement a new tax measure for digital currencies. Finance minister Apisak Tantivorawong said the country plans to impose a fixed 7% VAT on all cryptocurrency trades.

In February, Israel said it wouldThis article appeared first on Cryptovest