South Africa’s tax agency is looking into methods for identifying tax-dodging cryptocurrency traders, the acting head of the authority has revealed.
The South African Revenue Service (SARS) is studying ways to spot non-compliant cryptocurrency traders in order to investigate any scenario of failure to declare profits from investments, acting Commissioner Mark Kingon said while speaking at the Institute of Internal Auditors SA conference in Johannesburg recently.
As reported by Fin 24, the official explained the need to identify crypto traders, stating:
“The key thing is identifying people who are trading because it’s easy to say cryptocurrency gains must be deductible, but there are also those who lose. That’s why it’s important to identify the trader.”
A noncompliant trader would be investigated after being identified, the official remarked, pointing to a money trail by suggesting that most traders used credit cards to buy into cryptocurrencies.
Kingon said while tax authority had certain ways– without any specifics beyond looking into credit card purchases- of identifying cryptocurrency traders, it lacked an efficient clear-cut way of combating tax evasion since traders also engage in activity outside the country while some transact with foreign bank accounts.
“[I]n terms of the broader reporting, the common reporting standards, country by country, (ensures) the world is getting smaller and we are getting far more people transacting in foreign jurisdiction,” Kingon further said, suggesting SARS would soon have the means to snoop into transactions in foreign bank accounts due to information-sharing practices.
“I think it is a matter of time, but it will enable us to do better,” he added.
SARS has pinned the responsibility directly on traders and miners to declare cryptocurrency gains or losses as part of their taxable income under standard rules. Capital crypto gains or losses from mining, trading, purchasing cryptocurrencies through exchanges and even their usage in payments are all to be accounted for, the agency told taxpayers in a public notice in April this year.
As reported by CCN at the time, the taxation agency warned:
The onus is on taxpayers to declare all cryptocurrency-related taxable income in the tax year in which it is received or accrued. Failure to do so could result in interest and penalties.
Featured image from Shutterstock.
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