BITCOIN TRADERS: Over the past year bitcoin interest in South Africa has grown exponentially. Cryptocurrencies are becoming more prevalent to residents living in the African country.
The South African Treasury has proposed a few amendments that apply to the country’s Taxation Laws Amendment Bill (TLAB) and how cryptocurrencies are taxed.
However, according to the news from South Africa, if the proposals are accepted, bitcoin trades could be exempt from value-added tax (VAT).
South African Treasury Proposals Could Make Bitcoin Trades Exempt from Value-Added Tax Laws
This is unlike last year April when the South African Revenue Service (SARS) revealed its latest guidelines towards cryptocurrency taxation and explained that taxpayers must declare profits and losses if the funds stem from digital asset transactions. And that failure to do so could result in interest and penalties.
Now the recent report, is that members of the South African Treasury have proposed new guidelines that could make trading bitcoin and other virtual currencies exempt from VAT.
A senior tax consultant from Mazars, Tertius Troost, explains to regional publications that the proposals will make things much clearer for individual cryptocurrency tax filings and how they apply to the VAT Act.
Here is what Troost said in an interview, “The clarification of the VAT treatment will be well received, especially on the basis that the issue, acquisition, collection, buying or selling or transfer of ownership of any cryptocurrency will be included under the definition of financial services in terms of section 2 of the VAT Act,”.
What we should take note now is that, If the proposal is accepted, all dealings in cryptocurrencies will be exempt from VAT. This means there will be no VAT input claims on the acquisition of cryptocurrencies, and no VAT output being levied on the disposal of cryptocurrencies.