link2414 link2415 link2416 link2417 link2418 link2419 link2420 link2421 link2422 link2423 link2424 link2425 link2426 link2427 link2428 link2429 link2430 link2431 link2432 link2433 link2434 link2435 link2436 link2437 link2438 link2439 link2440 link2441 link2442 link2443 link2444 link2445 link2446 link2447 link2448 link2449 link2450 link2451 link2452 link2453 link2454 link2455 link2456 link2457 link2458 link2459 link2460 link2461 link2462 link2463 link2464 link2465 link2466 link2467 link2468 link2469 link2470 link2471 link2472 link2473 link2474 link2475 link2476 link2477 link2478 link2479 link2480 link2481 link2482 link2483 link2484 link2485 link2486 link2487 link2488 link2489 link2490 link2491 link2492 link2493 link2494 link2495 link2496 link2497 link2498 link2499 link2500 link2501 link2502 link2503 link2504 link2505 link2506 link2507 link2508 link2509 link2510 link2511 link2512 link2513 link2514 link2515 link2516 link2517 link2518 link2519 link2520 link2521 link2522 link2523 link2524 link2525 link2526 link2527 link2528 link2529 link2530 link2531 link2532 link2533 link2534 link2535 link2536 link2537 link2538 link2539 link2540 link2541 link2542 link2543 link2544 link2545 link2546 link2547 link2548 link2549 link2550 link2551 link2552 link2553 link2554 link2555

Should Tax on Bitcoin Be Eliminated? The Case of South Africa

Should Tax on Bitcoin Be Eliminated? The Case of South Africa

    

One of the most widely utilized trading platforms

Bitcoin exchanges in South Africa including Luno, one of the most widely utilized trading platforms in the country, stated that Bitcoin earnings are taxable in South Africa. When trading, the exchange suggested users consult registered tax professionals to ensure that they are compliant with South African regulations.

Should the tax on Bitcoin be eliminated?

Most countries that have fully adopted and regulated Bitcoin such as Japan have eliminated the tax on Bitcoin trading. On April 1, Japan officially declared Bitcoin’s exemption from consumption tax and eliminated the possibility of double taxation on trading. Recently, the Australian government also exempted Bitcoin trading from goods and services tax (GST). “The Government has released a consultation paper on changing the GST treatment of digital currencies. This change will ensure that consumers are no longer ‘double taxed’ when using digital currencies to buy goods and services already subject to GST,” read the 2016 — 17 Budget Report of the Australian government.

In South Africa, however, Bitcoin trading is subjected to general principles of South African tax law. The South African Revenue Service stated that transactions or speculation in Bitcoin are subject to tax and should be taxed accordingly. The government institution further emphasized that it is the responsibility of both citizens and residents of South Africa to report relevant details to the South African Revenue Service. Former BitX Product Design Director and Blockchain investor Simon Dingle also stated that Bitcoin trading in South Africa could trigger a capital gains event and encouraged traders and investors to consult tax professionals before trading on South African exchanges.

“It may trigger a capital gains event, or could qualify as income for active traders. All assets are treated equally in terms of tax,” said Dingle. More to that, income received in Bitcoin and other digital currencies are taxed as conventional income tax. It is still unknown whether double taxation applies and, as a result, if users are subject to both income tax and capital gains tax. Additionally, Luno Head of Growth Werner van Rooyen stated that various factors could impact taxation on Bitcoin transactions and trading depending on the situation of users.

Rooyen stated:

”There are various factors that could impact taxes an individual owes to the tax authorities, The short answer is that all income is taxable in South Africa and it is the responsibility of individuals to remain tax compliant.”

Regulations and taxation policies

The Australian Treasury changed its regulations and taxation policies on Bitcoin after seeing a sharp decline in interest in Bitcoin and other digital currencies in the country. Exchanges that used to operate in the country have left Australia to other Bitcoin-friendly regions such as Singapore and Hong Kong. For that reason, the Australian Treasury removed the double taxation of Bitcoin.

As its report read:

“For digital currency, the current treatment under the GST means that consumers are ‘double taxed’ when using digital currency to purchase anything already subject to GST. The Government recognises that this treatment may be preventing the use of digital currencies and hindering their further development.”

Aggressive taxation policies on Bitcoin could also result in a delayed andlimited growth for the South African exchange market and Bitcoin industry. The South African government must consider the effect of double taxation and clarify the taxation policies that apply to Bitcoin and digital currencies.

Chuck Reynolds
Contributor
Please click either Link to Learn more about – Bitcoin.

Alan Zibluk Markethive Founding Member