Crypto traders defaulting in tax payments may have problems with the SARS, the tax service in South Africa.
Local tax expert has raised a warning over the criminal liability crypto traders are likely going to face when the South African Revenue Services (SARS) comes and lay tax offenses charges on them.
A month ago, a report from the country revealed that the country is looking to censor cryptocurrency trading by criminalising the transfer of cryptocurrency bought in the country to exchanges overseas.
The Intergovernmental FinTech Working Group (IFWG) published a FAQ containing it’s position on cryptocurrencies.
A section of the document concerning digital assets stated that:
“Exchange Control Regulation (10(1)(c) prohibits transactions where capital or the right to capital is without permission from National Treasury, directly or indirectly exported from South Africa.”
This meant that a punishment has been prescribed for violators who transfer locally acquired cryptocurrencies to foreign exchanges a penalty of up-to five years imprisonment and a fine of $17,500 (R250,000).
The Tax expert, Thomas Lobban said many crypto traders are not aware of the tax liabilities on them and this is partly due to the SARS which hasn’t done enough in guiding traders.
According to him, it “is easier for SARS to secure criminal convictions for tax offenses” due to changes to the tax laws but it hasn’t done well in helping traders understand their obligations.
He said further that:
“The lack of any meaningful guidance from SARS has not helped the situation either, leaving crypto investors with nothing more than their own best guesses about the correct tax treatment to be applied in each case.”
While he partly blames the SARS, the legal manager at Tax Consulting South Africa, Thomas L. also blames what he describes as “very strange beliefs about tax and crypto-assets’ ‘ which makes crypto traders think they only become liable a5 the point of withdrawal.
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