Taxing Bitcoin and other cryptocurrencies is a regulatory hurdle which needs to be overcome sooner or later. In this regard, various countries already have taxation guidelines in place, and South Africa seems set to be joining the fray fairly soon.
Taxing Bitcoin in South Africa
There have been many rumors regarding South Africa taxing Bitcoin for some time now. The discussions originally date back to April 2018 when the South African Revenue Service made it clear that it would tax cryptocurrencies at some point in the future.
Considering how Bitcoin and altcoins are considered to be intangible assets, they are effectively subject to income tax. However, without proper guidelines, that is impossible to achieve.
This does not mean South Africa will suddenly recognize Bitcoin as official tender. Instead, the government aims to tax cryptocurrencies, despite them not being regarded as a currency for income tax purposes or capital gains tax several months ago. Under the new regulation, cryptocurrencies will remain intangible assets and be subject to income tax.
How Will This Change Things For the Common Man?
With the introduction of this latest move, South Africans will now need to declare their cryptocurrency profits and losses to the SARS. A similar approach has been taken by the IRS in the United States. However, that entity has made it clear that it is not seeing a lot of tax filings pertaining to cryptocurrency, despite knowing all too well how many Americans effectively own Bitcoin and other similar alt-assets.
One silver lining as part of these new regulations is how cryptocurrency will remain VAT-exempt until further notice. This means users won’t pay VAT based on acquiring, issuing, collecting, buying, selling, or transferring ownership of Bitcoin and other altcoins.
Although not everyone is a big fan of cryptocurrency taxation in this day and age, it is evident that taxation guidelines like these bring more legitimacy to cryptocurrencies in general.