In an analysis made earlier by South African tax expert, Thomas Lobban, he explained how South Africans who are in the business of cryptocurrency trading and do not pay tax risk possibly jail time if the South African Revenue Services (SARS) decides to charge them with tax offenses. He went further by saying that South Africans who also ply the crypto trade but use offshore exchange platforms to keep their crypto assets and trade are not left out of this jail threat.
Who exactly is to be blamed?
Lobban’s warning is in line with reports from earlier this year which clearly suggested that changes to tax laws in South Africa at the time may have made securing criminal convictions for tax offenses a lot easier for SARS. The warnings also resonate with June reports that seemed to suggest that SARS had officially asked all independent cryptocurrency platforms operational within South Africa, to tender information regarding their client base.
Despite all these warnings and indications, however, Lobban, a legal practitioner, and manager at a local tax consultancy firm, believes that many crypto traders are still not fully aware of the consequences of their tax evasion. The expert believes that SARS is to be partly blamed for not doing enough in properly guiding these crypto holders.
So far, SARS has been unable to give any meaningful guidance to help the situation, thereby leaving the crypto investors with nothing more than their own intuition when it’s time to decide on the correct tax approach or treatment to apply to various cases.
Lobban also blamed what he termed “very strange beliefs about tax and crypto-assets” as the other major reason why most crypto holders are defaulting when it comes to paying their taxes fully. He said due to these ridiculous beliefs, many traders think that tax liability can only arise “upon withdrawal.”
South African foreign traders also targeted
Lobban went further to clarify that even South African traders who do their business on foreign platforms are targeted as well.
SARS can easily request the collection and provision of information in relation to a taxpayer from other revenue authorities globally, as well as request assistance in the collection of tax as a result of the many tax treaties it already has in place.
In the meantime, however, Lobban has advised South African cryptocurrency holders and traders who don’t know their stand regarding their tax obligations “to approach SARS first and declare crypto profits and losses in their returns.” This is the only way to be in SARS’ good books and avoid sanctions, says the expert.