The South African Revenue Service is working to improve the tracking of cryptocurrency traders and their transactions in order to verify if...
The South African Revenue Service is working to improve the tracking of cryptocurrency traders and their transactions in order to verify if they are paying taxes. According to its Commissioner, the agency is exploring ways to better identify those that are profiting from trading digital assets and check if they are evading taxation.
Also read: Chinese Courts Face Hundreds of Crypto Cases, Struggle with Rulings
Identifying Traders is Key, Commissioner Says
SARS, the South African Revenue Service, is actively looking into ways of identifying people that are trading cryptocurrencies to establish if they are avoiding taxes due on their incomes, the acting Commissioner of the authority, Mark Kingon, revealed quoted by Fin24. During a conference organized by the Institute of Internal Auditors in Sandton this week, Kingon remarked:
The key thing is identifying people who are trading because it’s easy to say cryptocurrency gains must be deductible, but there are also those who lose. That’s why it’s important to identify the trader.
The official emphasized that identification is the main issue and the most critical aspect, Pressportal relayed. He went on to explain that as most traders use credit cards to purchase digital assets, once a noncompliant trader is properly identified, SARS can launch an investigation into the case.
Mark Kingon also noted that while the agency has its procedures in place to identify traders, dealing with the issue is not straightforward. Many of the South African crypto investors are actually using foreign bank accounts and some are conducting their transactions in other jurisdictions.
“The world is getting smaller and we are getting far more people transacting in foreign jurisdiction,” the commissioner said, adding that common reporting standards will enable authorities in different countries to do better in that respect.
Regular Tax Rules Apply to Crypto Incomes
Earlier this year, the South African Revenue Service decided that the regular tax rules should apply to incomes and profits from crypto-related transactions. Taxpayers in the country were told they were expected to include gains and losses from trading cryptocurrencies in the taxable income reported on their tax returns.
“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,” SARS warned in April, as news.Bitcoin.com reported. Along with the statement, the authority acknowledged it had received many calls to clarify the matter and provide guidance on reporting crypto incomes for taxation purposes. It also insisted no separate interpenetration of the regulations was needed.
The popularity of cryptocurrencies is continuing to grow among South Africans and in the region as a whole, and the need for clarity in regards to crypto taxation has increased. In July, the South African Treasury put forward several amendments to the country’s tax legislation including, according to local media reports, a proposal to exempt crypto traders from VAT (value-added tax).
What is your opinion on crypto taxation? Share your thoughts on the subject in the comments section below.
Images courtesy of Shutterstock, SARS.
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