South African tax expert Thomas Lobban has warned crypto traders who do not pay taxes that they face a possible jail sentence as the South African tax service (SARS) decides to file charges related to tax crimes. He adds that this threat of imprisonment also extends to South African crypto traders who use offshore exchange platforms to trade or store crypto assets.
Alleged lack of leadership
The lobby’s warning follows reports released earlier this year that changes to South Africa’s tax code have made it easier to prosecute SARS for tax crimes.The warnings follow reports in June that SARS had asked it to” provide information on the customer base of independent South African crypto platforms.”
However, despite this major warning, Lobban, Legal Director at local tax consulting firm Tax Consulting South Africa, admits that many crypto traders are unaware of the extent of their tax obligations. The expert puts the blame partly on SARS, which he says is not enough to guide cryptocurrency owners. He explained:
SARS and this situation did not help the situation by giving crypto investors nothing more than their own best assumptions about the right tax regime to be implemented on a case-by-case basis.
Lobban also blamed what he called “very strange ideas about taxes and crypto assets” as another main reason why many cryptocurrency owners don’t pay their taxes in full. Because of these beliefs, many crypto traders still believe that tax liability only occurs when “money is withdrawn”.
South Africans are also targeted for trading on foreign crypto exchange exchanges
The tax expert is also working to improve SARS information collection mechanisms, although he appears” reluctant to make recommendations regarding the appropriate tax regime.” Such mechanisms are the ones the revenue collector hopes to use in harassing South African cryptocurrency owners who trade offshore excise taxes
