South African Treasury Submits Value-Added Tax Exemption For Bitcoin Trades

The South African Treasury has recently proposed some amendments that apply to the South African Tax Laws Amendment Bill (TLAB) and the way in which cryptocurrencies are taxed.

According to the regional reports, if the proposals are accepted, bitcoin trades could be exempt from value added tax (VAT) in South Africa.

BTC Regulations In South Africa

For some time now cryptocurrencies have became more familiar to citizens living in South Africa. Over the past year, interest in bitcoins from this country has grown exponentially according to Google Trends.

We can mention that the interest in bitcoin and other digital assets in South Africa has steadily increased in recent years. For example, in April, the South African Revenue Service (SARS) released its latest guidelines on taxation in cryptocurrency and explained that taxpayers must report profits and losses if funds are derived from digital asset transactions.

SARS details that taxpayers who are unsure whether their tax returns involve cryptocurrency may seek guidance from the tax entity.

“The onus is on taxpayers to declare all cryptocurrency-related taxable income in the tax year. Failure to do so could result in interest and penalties,”

said SARS on April 6, 2018.

South African Treasury Could Exempt BTC Trades From VAT

Recently, South African Treasury officials have proposed new guidelines that could exempt commercial bitcoin and other virtual currencies from VAT.

The regional reports detail that the proposals aim to change the definition of digital assets as taxable financial instruments. The proposals also point to a change with regard to the clarity of the country's VAT law, as well as the loss provisions of the Income Tax Law.

A senior tax advisor at Mazars, Tertius Troost, explains to the regional publications that the proposals will make things much clearer for individual tax returns in cryptocurrency and how they apply to the VAT law.

Clarification of the VAT treatment may be very welcome, especially on the grounds that the issue, acquisition, collection, purchase or sale or transfer of ownership of any cryptocurrency will be included in the definition of financial services in terms of section 2 of the VAT Act.

If accepted, all transactions on cryptocurrency will be exempt from VAT. This means that there will be no input tax claims on the purchase of cryptocurrencies. And no VAT will be charged on the disposal of cryptocurrencies.

Troost further explains that VAT costs associated with mining may not have to be claimed on the VAT associated tax return. The tax adviser also emphasizes that the Treasury has proposed the acquisition or disposal of any cryptocurrency under the caption of the provisions for assessed losses sometimes referred to as ‘suspect trades’. This would mean that some sales on cryptocurrency may not be able to offset losses in certain cases. That is, these losses are fenced in to be used only against future gains from cryptocurrencies.

If approved this decision may be very positive for the crypto market in the region and the country. During this year, several nations have been trying to better regulate virtual currencies and South Africa can be taken as an example that other countries could follow.

Growing Interest In Cryptos In South Africa

Digital coins have been very popular in the South African region, which eventually led to tax officials now examining so deeply the transactions in cryptocurrency.

The volumes of LocalBitcoins and Paxful in South Africa have increased steadily in recent weeks.

The interest in bitcoin is greater than in any other region of the world. As Google Trends reports, South Africa is the number one area in the world for ‘bitcoin-related’ queries.

Cryptocurrency ATMs have become more common in the daily lives of South Africans. There are now ATMs in Johannesburg, Nelspruit, Cape Town and Midrand.

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Bitcoin Exchange Guide News Team
B.E.G. Editorial Team is a gracious group of giving cryptocurrency advocates and blockchain believers who want to ensure we do our part in spreading digital currency awareness and adoption. We are a team of over forty individuals all working as a collective whole to produce around the clock daily news, reviews and insights regarding all major coin updates, token announcements and new releases. Make sure to read our editorial policies and follow us on Twitter, Join us in Telegram. Stay tuned. #bitcoin

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