New regulations under discussion as part of reviewing South Africa’s Taxation Laws Amendment Bill (TLAB) suggest that Bitcoin trades may become exempt from value-added tax (VAT)
The South African government has already begun to examine how to address cryptocurrency as part of the economy due to its rising popularity in the country. The South African Revenue Service’s (SARS) most recent announcement on April 6, concerning cryptocurrency investment or trading this year stipulated that taxpayers must declare their profits or losses arising from any cryptocurrency transactions along with their annual end of year earnings.
“The onus is on taxpayers to declare all cryptocurrency-related taxable income in the tax year. Failure to do so could result in interest and penalties.”
However, the new rules if legislated would make crypto trades exempt from VAT, due to proposals to actually change the definition of digital assets and applicability of VAT in order to clarify and simplify returns for taxpayers. A senior tax consultant from Mazars, Tertius Troost, tried to explain:
“The clarification of the VAT treatment will be well received, especially on the basis that the issue, acquisition, collection, buying or selling or transfer of ownership of any cryptocurrency will be included under the definition of financial services in terms of section 2 of the VAT Act.”
The tax consultant goes on to explain that mining may well not be included in the new tax rules for VAT, but suggests that is the only good news, as some cryptocurrency will not be able to offset losses in the normal way as they fall into an area of taxation which is known as “suspect trades” so losses would be held over only to be used against potential future profits earned from cryptocurrency trading.
However despite this, should the tax law be changed, there will at least be no VAT levied on the acquisition of cryptocurrencies such as Bitcoin, nor on their disposal through sales or purchases.
Interest in the market is continuing to grow in the region, as illustrated recently by Google’s worldwide bitcoin-related searches which showed the highest concentration to be currently in South Africa. For public investor convenience, the growing trend has resulted in more Bitcoin ATMs becoming available as trade volumes continue to show improvement across the country.
Follow BitcoinNews.com on Twitter at @BitcoinNewsCom
Telegram Alerts from BitcoinNews.com at https://t.me/bconews
Image Courtesy: Pixabay
