The South African Revenue Service (SARS) won’t make new rules for advanced monetary standards but wants all income and losses from Cryptocurrencies to be accounted for as resources under existing protocols.
In an announcement posted on its site, SARS said that virtual currencies would be dealt with as “assets of an intangible nature” as opposed to old-fashioned fiat monetary standards and would be subjected to existing capital increases as per the Income Tax Act.
“Whilst not constituting cash, cryptocurrencies can be valued to ascertain an amount received or accrued as envisaged in the definition of ‘gross income’ in the Act. Following normal income tax rules, income received or accrued from cryptocurrency transactions can be taxed on revenue account under ‘gross income’.”
“Alternatively such gains may be regarded as capital in nature, as spelled out in the Eighth Schedule to the Act for taxation under the capital gains tax paradigm.” A statement from the tax authorities noted.
The tax agency said it expected all affected taxpayers in the country to state any gains or losses emanating from digital currency trades as a component of their taxable wage.
SARS is looking at three categories of cryptocurrency deals for tax purposes.
Digital currencies obtained through mining tasks are viewed as “held as trading stock” until the point that the client chooses to deal or exchange them for fiat currencies. Once dealt, the digital money would fall under the other categories.
Digital assets can be traded for local currency (or the other way round) by utilizing digital currency trading platforms or through private exchanges.
“Normal barter transaction rules apply” when speculators trade a cryptocurrency for merchandise or other items.
The tax office said it is investigating best ways to apply value-added tax (VAT) on digital assets.
South Africa’s push on taxing crypto assets comes after a few other countries have also drafted legislation to rake off something from digital currencies.
A week ago, Thailand said it was searching for approaches to execute another duty measure for digital currencies in the country. Observers say the Asian country intends to charge a 7% VAT on all digital currency trades.
In February, Israel said it would regard Cryptocurrencies as properties for the imposition of taxes.