South Africa is one of the countries with the largest crypto market in Africa. Over the past few years, the adoption of cryptocurrency has grown with more people learning how to buy bitcoin in South Africa and several business owners accepting bitcoin as a form of payment for goods and services.
Before any rule was introduced to address the nature, taxation, and the use of bitcoin in South Africa as a legal tender, many people have grabbed the opportunity and made a lot of money from investing in bitcoin and other altcoins.
However, in recent times the South African Revenue Service has been very strict with crypto taxation, and this is creating a kind of panic in the SA crypto community.
South Africa released its first statement regarding virtual currencies in 2014. The central bank released warnings about the risks involved in dealing in bitcoin and other cryptocurrencies, stating that there is no legal protection given to users engaging in crypto.
The warning explained that while these types of assets can be traded on different platforms, they are not categorized as securities based on the financial market acts. This implies that the regulations related to trading securities do not apply to bitcoin or any other virtual asset. Because of the absence of a suitable category for digital currency, there is a need for the government to provide proper guidance on the taxation of bitcoin and other virtual assets.
Two years later, SA created a group named the Intergovernmental Fintech Working Group (IFWG) to facilitate cooperation and interrelationship among the policymakers of fintech developments. In 2018, another group called the Crypto Asset Working Group was created which included members of the IFWG and the South Africa Revenue Service (SARS) was formed for analyzing and evaluating the country’s position on digital assets. A year after, the group released a paper explaining the several uses of crypto with an emphasis on trading digital assets. SARS later released a statement to explain the taxation of digital currencies in SA.
Bitcoin is currently unregulated in South Africa. However, bitcoin and other cryptocurrencies are now taxable in South Africa. The tax amendment bill on crypto now regards bitcoin as well as other crypto-assets as a financial instrument. So, the rule that applies to the sale of financial products also applies to digital currencies.
Read about the top African countries adopting crypto in 2025.
How SARS plans to tax cryptocurrencies
According to SARS, the government of South Africa doesn’t view any crypto assets as a currency. Therefore, all income made from cryptocurrency trading or investment can be taxed. SARS highlighted that crypto returns from active trading will either be taxed as income, while returns from a long-term investment will attract capital gain tax.
The tax authority explained that crypto profits and losses can widely be described in three different scenarios, with each having its unique tax consequences. So if you want to deal in bitcoin in South Africa, you have to understand the category you fall under.
The first scenario is crypto gotten through the mining process. Miners are rewarded with bitcoin for solving a complex cryptographic problem to secure the network and process Bitcoin transactions.
The above process gives rise to an immediate accrual on successful mining of the crypto. SARS doesn’t provide adequate details on bitcoin earned through the mining process. This implies that until the crypto earned via mining is converted to cash, it is held as a trading stock which can later be realized through either of the other scenarios below. So, it could be taxed as normal income or capital gains. There might be a better clarification in the future.
The second scenario is when a trader exchanges fiat for crypto or crypto for fiat through any trading platform or even private trades. For taxation, short-term or daily trading with the aim of earning daily wages is regarded as an income, while long-term investments (typically more than 3 years) are subject to capital gains taxes.
The last scenario is a barter transaction where you are paid for a service rendered or you receive crypto as a form of payment for goods. In this case, the payment will be subject to normal tax.
Here’s a summary of the possible tax scenarios and statics
- Profits made from crypto trading will be taxed as income at a marginal tax rate
- If you buy and hold any asset for a long period and sell at a profit, you will be charged capital gain tax which could range from 7.2% to 18%.
What must be declared?
The South African Revenue Service explained in a statement released on the 6th of April 2018 that all taxpayers must declare every crypto-related taxable income in the tax year in which it was earned.
Individuals must also declare the source of their cryptocurrency in the tax return. If you bought any crypto-asset fiat or another cryptocurrency, you must state it in your tax return. You must also state if you mined the cryptocurrency or received it as a means of payment for a good or service.
Must a crypto trader register for VAT?
At the moment, a crypto trader doesn’t need to register for VAT because it is classified as a financial tool. This implies that when a taxpayer issues, receives or trades any crypto, the action is deemed a supply of financial service which is considered as an exempt supply. This could also change with a further review in the future.
What if I don’t declare my crypto investments?
Taxpayers that refuse to tender their crypto-related income or comply with audit requests by the South African Revenue Service may be liable to a fine or even a two years imprisonment.
In conclusion, many people believe that the increased adoption of crypto in the country is attracting greater regulatory interest and it wouldn’t be surprising if SARS releases new rules regarding crypto in SA. Taxpayers engaging in trading bitcoin in South Africa or any form of crypto activity should keep records of all trades and tender their activity to the relevant tax authorities at the appropriate time.
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