South Africa: soon a cryptocurrency tax?

Earlier this year, the South African Revenue Service (SARS) said it planned to clarify the tax implications of the transaction in cryptocurrencies in a note of interpretation or framing.

SARS spokeswoman Sandile Mamela told the media that they are considering the implications of the virtual currency on its tax base.

We are currently conducting exploratory discussions with other jurisdictions and we will continue to explore options in the coming year. Sandile Mamela

He added that SARS currently treats crypto-currencies in the form of the capital gains tax (CGT).

However, this is an area that the tax authorities must explore further. According to previous reports, the South African Reserve Bank (SARB) has reportedly begun testing a number of Bitcoin and other cryptocurrency related regulations since the end of 2017. This was followed by a December 2017 report in which SARS indicated that it was in discussion with a number of technology companies to enable it to more effectively track cryptocurrency transactions.

"As you can imagine, it's very difficult - blockchain technology. Without revealing too much of it - we are talking to some of the biggest tech companies in the world doing similar work in Canada and the UK. We hope to build on this technology, "said Dr. Randall Carolissen, SARS Research Manager.

Carolissen said the SARS response is consistent with the recommendations of the Organization for Economic Co-operation and Development (OECD), which include fairly detailed information on how cryptocurrencies should be considered for tax purposes.

He further stated that SARS had not yet received any major statements regarding cryptocurrencies.