The South Africa Revenue Service (SARS) has suggested tax income generated from cryptocurrency trading and operations.
According to TechWeez, the report said the proposal was first brought up in April when SARS announced its plans to tax digital currencies.
According to a statement by SARs, “In South Africa, the word ‘currency’ is not defined in the Income Tax Act. Cryptocurrencies are neither official South African tender nor are they widely used and accepted in South Africa as a medium of payment or exchange. As such, cryptocurrencies are not regarded by SARS as a currency for income tax purposes or Capital Gains Tax (CGT). Instead, cryptocurrencies are viewed by SARS as assets of an intangible nature.”
SARS submitted draft rules on how tax authorities should look at cryptocurrencies in the country. It added that the proposal was met positively by the South African cryptocurrency community because it signals government support for the space.
In the draft, SARS would continue to consider digital currencies as intangible assets but are still subject to income tax. If passed into law, all South African holders or traders of cryptocurrency should declare any profits or losses they incur from trading the asset class as part of their taxable income.
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In terms of Value-Added Tax (VAT), SARS said digital currency transactions are not charged with VAT because they are treated as an exempt financial service. The issuance, collection, selling, buying, acquisition or transfer of ownership of cryptocurrencies are not covered by VAT, the report said.
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