South Africa has become one of the unlikely crypto hubs in the continent. Along with other markets including Nigeria, he country has seen a boom in crypto traders. Despite the positive reception to crypto, the state remains concerned due to the significant number of crypto traders evading tax bills and failing to reveal profits and assets to the South African Revenue Service.
This has prompted the South African Revenue Service to ramp up its efforts to combat tax evasion by crypto traders as explained by Mark Kingon.
“The key thing is identifying people who are trading because it’s easy to say cryptocurrency gains must be deductible, but there are also those who lose. That’s why it’s important to identify the trader.”
There have been a number of problems highlighted which have limited the South African Revenue services abilities to identify tax evading traders. Initially, the nature of crypto being anonymous and highly decentralized prevents accurate tax bills from being drawn up to reflect a citizens assets. Mark Kingon, the current acting commissioner for the South African Revenue Service has warned traders they will not be able to hide profits much longer as without revealing specific details, he said currently the service has sophisticated means to tracking money trails and will also be using international links to prevent citizens from evading taxes by using foreign banks/services.
Cryptocurrency tax laws are remarkably straight cut with the country opting to view the assets as intangible assets rather than a legitimate currency. This has allowed crypto from being exempt from capital gains tax and even income tax which are significantly higher in the country.
To conclude, the South African Revenue Service has begun to actively look for solutions to prevent crypto traders from evading tax bills. The problem has remained a worldwide issue as despite the significant regulation of crypto around the world, it remains a tax free profit source