South Africa: Tax treatment of crypto-currencies | KPMG | BE
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South Africa: Tax treatment of crypto-currencies

South Africa: Tax treatment of crypto-currencies

The South African Revenue Service (SARS) announced that it will continue to apply normal income tax rules to crypto-currencies and will expect taxpayers to declare crypto-currency gains or losses as part of their taxable income.

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The position of SARS is that crypto-currency transactions are subject to the general principles of South African tax law. This means that any revenue received, gains made, or losses incurred in respect of crypto-currency transactions, may either be regarded as revenue in nature and included in the taxpayer’s income, or alternatively as capital in nature and subject to capital gains tax. 

In South Africa, the word “currency” is not defined in the tax law. Crypto-currencies are neither official South African tender nor widely used and accepted in South Africa as a medium of payment or exchange per the SARS statement. As such, crypto-currencies are not regarded by SARS as a currency for income tax purposes or capital gains tax. Instead, crypto-currencies are regarded by SARS as assets of an intangible nature. The test to determine the nature of the crypto-currency transaction and whether the transaction is of a revenue or capital nature, must include taking into account the taxpayer’s intention when acquiring the crypto-currency and must be decided considering the facts and circumstances of each case. 

 

Read a May 2018 report [PDF 103 KB] prepared by the KPMG member firm in South Africa

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