South Africa Expects Taxpayers To Declare Cryptocurrency Gains

Ali Raza
  • South Africa is now expecting its citizens to declare cryptocurrency-related gains for tax purposes
  • A review of this decision is expected in February

The South African Revenue Service, or SARS, has released an official statement in which it says normal tax rules apply to cryptocurrencies, meaning every South African who wishes to trade, or in any way deal with cryptos may have to pay an income tax.

Taxpayers are, naturally, required to clearly declare all of their losses and gains on the cryptocurrency market. Cryptocurrency earnings may be liable for capital gains tax (CGT) or may be treated under the country’s regular tax rules.

 SARS has stated that the onus to declare crypto-related taxable income is on taxpayers, and that failure to report income from cryptocurrencies can and will result in penalties and interest.

The organization revealed it realizes that many people might not be aware of what they need to do to pay taxes for their crypto investments. As such, SARS is set to provide taxpayers guidance through various channels.

The decision, SARS noted, was influenced by growing interest in cryptocurrencies. The statement reads:

“Increased attentiveness and speculation regarding the future of cryptocurrencies has prompted calls for SARS to provide direction as to how cryptocurrencies should be treated for tax purposes. However, as indicated in this media statement, there is an existing tax framework that can guide SARS and affected taxpayers on the tax implications of cryptocurrencies, making a separate Interpretation Note unnecessary for now.”

SARS

In South Africa, cryptocurrencies aren’t seen as legal tender and, as such, aren't widely accepted as a payment method. This, SARS argued, means they are considered assets, with no tangible nature.

Since cryptocurrencies don’t have a physical form and can't be used as cash, income received and accrued from cryptocurrencies transactions will be taxable under “gross income.”

On a positive side, SARS claims taxpayers are entitled to claim cryptocurrency-related expenses, “provided such expenditure is incurred in the production of the taxpayer’s income and for purpose of trade.” Additionally, it won’t require “VAT registration as a vendor for purposes of the supply of cryptocurrencies.

The organization revealed that in the 2018 budget review in February it’s set to further clarify the situation.

Japan's Self-Regulatory Organization for Crypto Firms Adds Coinbase as Second-Class Member

Japan’s Virtual Currency Exchange Association (JVCEA), an official self-regulatory body of crypto exchanges, has added San Francisco-based crypto exchange Coinbase as a second-class member.

Coinbase has in the past applied for an operating license in the country, which suggests the cryptocurrency exchange is preparing for a presence in the Japanese market. The JVCEA announced the news, and revealed two other local firms – Tokyo Hash and Digital Asset Markets – joined the organization as second-class members as well.

The JVCEA was created back in 2018 to restore confidence in the industry, which was being plagued by a number of crypto exchange hacks. These included the biggest one ever seen in the industry, in which hackers stole $500 million worth of NEM tokens from Coincheck.

The move sees the San Francisco-based cryptocurrency exchange join other second-class members “applying for or planning to apply for virtual currency exchange registration as prescribed in Article 63-3 of the Payment Services Act.”

The JCVEA currently has 22 class one members, including leading industry players in the country like Rakuten, SBI, and bitFlyer. Its second-class members include Coinage, OKCoin, WIREX Japan, and others. While businesses looking to expand to the country can apply to enter the JVCEA, exchanges willing to offer services in Japan need a license from the Financial Services Agency (FSA) – Coinbase hasn’t received its license.

Notably, the San Francisco-based exchange became the first “pure” crypto firm to become a Visa principal member earlier this month. Being a Visa principal member means it can cut middlemen and issue its own debit cards.

Featured image via Pixabay.