South Africans Instructed to Pay Tax on Bitcoin and Cryptocurrency Earnings
South Africa has joined a growing list of countries that expect citizens to pay income tax on their cryptocurrency earnings.
The South African Revenue Service (SARS) released a today, April 6, 2018, making it clear that, even though the country does not consider cryptocurrencies legal tender, you still have to pay taxes on the gains.
That means that anyone who is paid for goods or services in bitcoin must declare that just as they would ordinary income. Also, traders who make money buying cryptocurrencies at a low and selling at a high will have to pay capital gains on any profits. Further, anyone who mines cryptocurrencies will have to pay taxes on the money they make as well.
“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,” SARS said.
SARS still has yet to make clear the value added tax (VAT) status of bitcoin. “The 2018 annual budget review indicates that the VAT treatment of cryptocurrencies will be reviewed. Pending policy clarity in this regard, SARS will not require VAT registration as a vendor for purposes of the supply of cryptocurrencies,” SARS said.
South Africa is not alone in taxing bitcoin. , including the U.S., Japan and South Korea, tax all gains arising from selling, trading and purchasing items with cryptocurrencies, as well as gains accrued through mining and .
As by the Wall Street Journal, bitcoin use has surged in South Africa amid political and economic instability in the country, where it can be used to transfer money without restriction due to sanctions or going through a bank.
In the past, South Africa has taken an open-minded stance on bitcoin and cryptocurrencies. In 2014, the South African Reserve Bank (SARB) issued a on virtual currencies where it declared that virtual currency has “no legal status or regulatory framework” and is, therefore, unregulated in South Africa. But in July 2017, SARB began to work with blockchain-based solutions provider to test out a number of new cryptocurrency regulations in the country.
Read more about where countries around the world stand on cryptocurrency regulation in 2018 .
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BTC Inc., parent group of BTC Studios, BTC Labs and BTC Media, and Genesis Mining, a cloud mining service provider, recently announced a partnership to launch Genesis Engineering, a Hong Kong–based joint venture focused on promoting and developing the cryptocurrency mining industry worldwide, with a special focus on emerging and underserved markets.
“We see opportunities in terms of excess capacity worldwide in such regions as the Americas and Eurasia, said , CEO of BTC Media. “Centers of mining are often places with excess capacity and relatively cheap electricity rates. As a result, mining operations bring benefits to those areas in terms of both employment and resource allocation.”
“The excess energy supply in certain regions is a big opportunity for mining worldwide,” added Genesis Mining CEO and Co-Founder . “We see the positives of mining ranging from individuals to large organizations. Whether it is a hobby, someone’s way to accumulate a certain cryptocurrency or a business with a profit motive, mining has been a positive endeavor for people all over the world. We look forward to growing the base of miners worldwide through promotion, education and new initiatives.”
“The formation of a partnership between BTC Inc. and Genesis Mining to create Genesis Engineering is important because it combines the leaders in the cryptocurrency information space and the cloud mining space to grow the industry in underserved markets at a time when crypto is in a position to be embraced by and benefit new markets,” John Riggins, Head of Development for Eurasia at Genesis Engineering, told bitcoin Magazine.
“Genesis Engineering will be positioned as a mining information leader, promoting the industry through workshops and consulting in developing regions. We see an energy landscape that includes excess and unused electricity in markets that could benefit from the introduction of a crypto mining industry in their economy as China has benefited over the last few years.
“The crypto industry is in a growth stage and mining is a cornerstone of the industry that must grow in lock-step,” added Riggins. “Markets with excess energy capacity are in a good position to benefit as the mining industry develops, benefiting local economies through job creation and energy utilization.”
Riggins noted that the market of the post–Soviet Union is especially ripe for this sort of growth; therefore, Genesis Engineering will have a special focus in these countries. According to the company, these countries have the hallmarks of key regions for the development of cryptocurrency mining, including huge excess energy capacity, developed infrastructure and favorable climate conditions. For instance, oil producers in the region face an ecological tax on excess gases produced in oil excavation that is not put to use and is burned; this is gas that can be used to power mining facilities, create local jobs and make these countries regional leaders in the crypto industry.
“On the information and promotion side, we will be opening the first of multiple showrooms and co-working spaces in November,” Riggins said. “This facility will house a mining museum and will be used as a venue to promote the industry through workshops and a speaker series. On the consulting and mining business side, we are in negotiations with the largest electro energy production companies in the region, consulting on the positives of mining and the opportunity to use their spare capacity in these territories.”
Genesis Engineering will support the crypto mining industry broadly, including not only bitcoin but additional coins. It considers mining to be an important feature of the cryptocurrency sector, ensuring security and decentralization through incentives. The target market of Genesis Engineering ranges from hobbyists and small businesses reached by the company’s showrooms, co-working spaces and speaker series, to multinational energy companies and large-scale miners reached by the company’s consultancy and mining projects.
Besides promotion of cryptocurrency mining and related consulting work, Genesis Engineering will offer cloud mining services through Genesis Mining, with an initial focus on markets that have been underserved in Eurasia. The pricing structure will be similar to Genesis Mining’s current offering, but with a focus on making the service and mining equipment attractive in emerging markets, as well as to organizations that are interested in large-scale mining but have not yet entered the industry and will need to be led through that process.
Persuaded that cryptocurrency mining can be a boon to energy suppliers and populations in these regions, “Genesis Engineering will consider partnerships with energy providers and analyze how crypto mining could add value to different markets,” concluded Riggins.
