Tax experts say that the South African Revenue Service is targeting cryptocurrency traders to sniff out potential non-compliance.
“This includes a keen focus on crypto asset taxation and rectifying historic taxpayer issues of non-declaration of crypto-related profits or gains, albeit without providing firm guidance to the average taxpayer,” they said. “As simple as this disclosure may sound in theory, unfortunately, the reality is more complicated. Cryptocurrency transactions are subject to a range of tax regulations, including capital gains tax, income tax, and even VAT in some cases,” they said.
“A digital representation of value that is not issued by a central bank, but is traded, transferred and stored electronically by natural and legal persons for the purpose of payment, investment and other forms of utility, and applies cryptography techniques in the underlying technology.” If the correct capital intent and objective external factors are shown, taxpayers will only be subjected to Capital Gains Tax.
This is particularly relevant for frequent traders whose crypto activities might push them into higher tax brackets.