The South African Revenue Service (SARS) is keen to increase budget receipts from holders of digital currencies. This view is held by Thomas Lobban, head of the cross-border taxation unit at Tax Consulting South Africa, according to BusinessTech.
A source told the publication that SARS’s interest in crypto traders’ income has grown, while most of them “do not realise that this activity gives rise to tax obligations.” As a result, crypto investors face an unexpected bill.
In Lobban’s view, the agency could treat capital gains as profits from transactions involving digital assets. Transactions that move one cryptocurrency to another without converting into the local rand SARS would define as a “tax event,” the expert contends.
He conceded that some operations may be interpreted as “income-generating.” For this reason, a South African resident will pay on them at his or her personal income tax rate.
A representative of Tax Consulting South Africa also drew attention to an expansion of SARS’s IT capabilities, which will allow it to “analyse and identify crypto transactions more effectively.”
Earlier, the South African authorities decided to tax profits from all cryptocurrency transactions.
In April 2020, the Intergovernmental Working Group on FinTech proposed tightening regulation of digital assets. Later, the Financial Sector Conduct Authority (FSCA) presented a draft regulation, according to which Bitcoin and other cryptocurrencies are treated as financial products.
FSCA unveiled new industry-regulation proposals in January 2021.
In February 2021 SARS began sending taxpayers requests to disclose additional information about crypto asset transactions.
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