South Africa Revenue Service’s (SARS) New Cryptocurrency Tax Law Draft
South Africa Issues Draft Virtual Asset Taxation Laws
The South African Revenue Service (SARS) lately issued a draft cryptocurency tax statute. The draft outlines the framework of cryptocurency revenue system in the Southern African nation. The tax organization emphatically set up arrangements to levy incomes generated from crypto currency transactions.
According to the nation’s Income Tax Act, the term ‘currency’ does not have a clear definition. Consequently, the virtual assets are not certified as legal tender, and are also not commonly used and embraced as a way of payment or exchange. As a result, the virtual assets are not considered as legal tender for the purposes of income tax. However, they are regarded by the tax agency as possessions of an immaterial nature.
Within the draft, the virtual assets such as Bitcoin will be categorized as immaterial possessions, which are subject to taxation. In case the draft legislation is embraced, the citizens of the nation will be under obligation to state the proceeds received from virtual asset transactions.
Not VAT On Virtual Asset Transactions
According to the draft legislation, all dealings to do with the virtual assets are excused from value added tax (VAT). The verdict was made on the basis of the realization that SARS considers such deals as being distinct from fiscal services transactions. As a result, buying, selling, possessing, or issuing virtual assets will not attract VAT in line with the recommended virtual taxation prototype.
According to Natalie Napier from the Hogan Lovells, a law firm based in South Africa, the recommended changes will have a restricted impact on the daily utilization of the virtual assets. For consumers who use the virtual assets on a day to day basis, they will not be charged when carrying out any transactions bordering on any virtual asset. Another good thing about the legislation is that extra VAT charges will not be levied on the costs related to transactions with cryptocurrencies.