South African Tax Collector Targeting Crypto Investors in Its Bid to Raise Extra Revenues – Taxes Bitcoin News
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The South African Revenue Service (SARS) has announced a new strategy to enforce tax laws on cryptocurrency investors. The strategy was announced recently by the deputy commissioner for core business and risk, Mohamed Ramalho. While noting that SARS has been keeping a close watch on cryptocurrency investors for some time, Ramalho says that the agency is now getting serious about collecting taxes from crypto investors.
The South African Revenue Service (SARS) has issued a new document in which it has indicated that it recognizes both the risks and the benefits that cryptocurrencies bring to the country’s economy, and it has made it clear that it wants to increase its tax revenues from these new technologies. According to the document, digital currencies are classified as assets, and as such they should be traded on exchanges and subject to capital gains tax.
Recent reports from South Africa suggest that the country’s tax authorities will now target cryptocurrency investors in an effort to increase the total amount of revenue collected. Along with high-net-worth individuals and offshore investors, digital currency holders now form a sector that is likely to shoulder the lion’s share of additional taxes to the taxman.
Cryptocurrency investors unaware of tax liability
However, according to the report, many South African holders of cryptocurrencies are unaware that trading cryptocurrencies carries a tax obligation. The report, based on Thomas Lobban’s expert opinion, states that the South African Revenue Service (SARS) has cryptocurrency trading under its radar (currently).
Mr Lobban, who is legal director at Tax Consulting South Africa, added:
As with any asset class, investors should understand their tax liability when investing in cryptocurrencies and plan accordingly. If they fail to do so, they run the risk of being confronted later with an unwanted tax assessment.
Miscellaneous crypto-currency transactions
Meanwhile, the report also quotes Lobban explaining how different types of cryptocurrency transactions can affect the type of tax paid. For example, Lobban argues that transactions involving cryptocurrencies can be considered capital and therefore only subject to capital gains tax.
On the other hand, some transactions can be considered as income generating and therefore taxable at the taxpayer’s normal rate according to the tax tables. The tax consultant also points out that in a transaction between z. B. Bitcoin and Etherium the notional gain from this transaction is also taxable. This view is contrary to the widespread view that the taxable event occurs only when the cryptocurrency is withdrawn and converted into legal tender.
Lobban, meanwhile, reports that SARS is already asking for information on cryptocurrency transactions in audit letters to taxpayers. Moreover, the tax collector would be investing heavily in its IT capacity. The report adds that these capabilities will allow SARS to more effectively analyze financial and transaction data, as well as identify transactions on and off cryptocurrency platforms.
What do you think about SARS targeting cryptocurrency investors? Tell us what you think in the comments below.
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