The South African Revenue Service (SARS) has said that it plans to provide clarity on the tax implications of transacting in cryptocurrencies like Bitcoin in either an interpretation or practice note early this year.
In an interview with ITweb, SARS spokesperson Sandile Mamela said the revenue service, like most other revenue authorities in the world, is looking at the implications of virtual currency on its tax base.
“We are currently having exploratory discussions with other jurisdictions and will continue to explore options in the coming year,” said Memela.
He pointed out that, currently, SARS is treating crypto-currencies under Capital Gains Tax (CGT), but it is an area the revenue body needs to explore further.
In July, it was reported that the South African Reserve Bank (Sarb) would start testing a number of regulations related to Bitcoin and other cryptocurrencies before the end of 2017. This was followed by a December report in which SARS said it was in discussions with a number of technology companies to enable it to track cryptocurrency trades more efficiently.
“As you can imagine it is very difficult – the blockchain technology. Without revealing too much – we are talking to some of the top technology companies in the world that are doing similar work for Canada and the UK and we are hoping to get that technology,” said Dr Randall Carolissen, SARS group executive for research in December.
Carolissen said SARS is working through the Organisation for Economic Cooperation and Development’s (OECD) recommendations, which include quite detailed information on how cryptocurrencies should be treated.
He said that SARS hadn’t received any major cryptocurrency declaration until this point.