In South Africa, as with most other countries around the world, there is no specific guidance and regulation regarding cryptocurrencies and many aspects of technology law.
In the recent budget review, South African Revenue Service (“SARS”) proposed that any amendments to the income tax and value-added tax (“VAT”) legislation to deal with cryptocurrencies, pose a risk to the South African tax system. This whilst some believe that, given the current Budget deficit, the imposition of taxes on cryptocurrencies could assist SARS in increasing its revenue collection.
With that being said, in a statement issued by SARS on 6 April 2018, the onus has firmly been placed on taxpayers to declare all cryptocurrency-related taxable income in the tax year in which it is received or accrued.
SARS will continue to apply normal income tax rules to cryptocurrencies and will expect affected taxpayers to declare cryptocurrency incomes, gains or losses as part of their taxable income. Failure to do so may result in interest and penalties. Based on this, SARS are of the opinion that a separate Interpretation Note unnecessary for now.
But is this clear enough?