South Africa edges closer to crypto regulation
More regulation soundings, this time from South Africa. Techweez says the South Africa Revenue Service (SARS) appears to be moving towards agreement on how digital assets are treated as far as income tax regulations go.
Currently digital currencies are classed as intangible assets but not subject to VAT. But if new legislation is passed, all profits and losses would have to be declared.
Liable for taxation but not tender under Income Tax Act
SARS originally gave a view on the issue in April, saying that cryptocurrencies were neither official South African tender “nor widely used and accepted in South Africa as a medium of payment or exchange”.
“As such, cryptocurrencies are not regarded by SARS as a currency for income tax purposes or Capital Gains Tax (CGT). Instead, cryptocurrencies are viewed by SARS as assets of an intangible nature.”
Overall, a slight shift in emphasis and an acknowledgement that digital assets are a legitimate income stream. Another step to industry legitimisation.
Wider acceptance some way off
In May Old Mutual surveyed South African consumer responses to digital assets. It claimed more than 70% of respondents thought crypto currencies had potential to make significant investment earnings.
But there was significant resistance to reputational integrity: 43% believed cryptos were ‘bad news’ possessing uncomfortable similarities to pyramid selling.