Business & Finance

South Africa is Taxing Cryptocurrencies as Intangible Assets

Countries are trying their level best to control the use of cryptocurrencies as much as they can. Earlier India started taxing people on the amount of cryptocurrency that they own. South Africa also steps in to the same direction. The South Africa Revenue Service (SARS) drafted a proposal in which they introduced the idea to tax cryptocurrencies. South Africa Revenue Service (SARS) states:

In South Africa, the word ‘currency’ is not defined in the Income Tax Act. Cryptocurrencies are neither official South African tender nor widely used and accepted in South Africa as a medium of payment or exchange. As such, cryptocurrencies are not regarded by SARS as a currency for income tax purposes or Capital Gains Tax (CGT). Instead, cryptocurrencies are viewed by SARS as assets of an intangible nature.

Digital currencies like Bitcoin, Ethereum etc., would be considered as intangible assets under the draft and therefore they would be subjected to income tax. If the draft is approved and passed as a form of legislation then the people who own cryptocurrency would be liable to declare the amount of income they have earned from crypto transactions. Furthermore, the draft also states that the cryptocurrency transactions would be exempted from VAT i.e. Value-added tax.

The government of South Africa is planning to take initiatives that can help them regulate and monitor the transactions in the world of cryptocurrency, on the other hand, people are still showing their interests in it. 38% of South Africans wish that they had invested in digital currency. A survey was reported by a Pan-African financial services, Old Mutual Life Insurance, in July this year. The survey is called “Savings and Investments Monitor”. 71% of the people said that they can make a lot of money through cryptocurrency. Of the survey respondents, who do not own or who have never owned cryptocurrency, almost 50% said they plan to invest in an aspect of cryptocurrency or crypto mining in 2018.

People who never invested in cryptocurrencies before are also planning to invest in this industry either by purchasing them through a direct manner or by acquiring exposure and knowledge about the industry through cryptocurrency mining.

A recent development that happened in the world of cryptocurrency apart from drafting a proposal to tax is SAFCOIN. The launch of SAFCOIN would act as an initiative for the people of South Africa to make investments in token before the rest of the world.

The director and co-founder of the SAFCOIN, Neil Ferreira states:

SAFCOIN aims to make cryptocurrency investment easy and understandable for average South Africans, from the curious dabbler to the serious investor. We want to make cryptocurrency trading as accessible as possible, to as many Africans as possible. So it was crucial that our platform was easy to use, secure, and that the tokens were affordable. For the price of a takeaway meal, South Africans can be part of the growing cryptocurrency movement.

People can buy tokens through the SAFCOIN website in a secure environment as all the instant transactions are facilitated by online payment processors like i-Pay. The user of SAFCOIN would be required to enter their banking details via their mobile phone.

Many predictions are being made regarding Africa being the next frontier for cryptocurrency. The Central Bank of South Africa is studying the technology of digital currency and it might be the one coming up with new guidelines in order to foster and promote innovation.

Rakesh Sharma, a business and technology journalist states:

Africa is rarely mentioned among the largest markets for cryptocurrency, but it may be set to steal a march over other markets.

The pace at which South Africa is coming up with initiatives to tackle the new technological obstacle is intriguing. However, whether they are able to fully regulate and implement their initiatives would be disclosed in the near future.

Hiram Nadeem

Hiram is a teacher and media sciences graduate with focus over finance news. Contributes to BlockPublisher with fintech news and sometimes, her opinions. Email: editor.news@blockpublisher.com

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