South Africa bitcoin VAT exemption

The South African Revenue Service, SARS, has issued draft legislation covering the direct and indirect taxation of digital currencies such as bitcoin.

SARS is proposing to follow the European-model on indirect tax, and not make trades subject to VAT. Other countries which have followed this route include Japan, Singapore, and, latterly, Australia.

SARS is considering treating cryptocurrencies as an asset of intangible nature, and not a private currency as other countries have. The issue, acquisition, collection, buying or selling or transfer of ownership of any cryptocurrency will be included under the definition of financial services in terms of section 2 of the VAT Act. This will make any transactions exempt from VAT.

Profits made from trading would be subject to income tax for individuals, and corporate income tax for incorporated businesses.

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