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Taxman SARS pursues crypto dealers at SA exchanges

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The South African Revenue Service (SARS) is conducting a tax risk assessment exercise in respect of South African residents engaged in the mining, speculation and/or investment in crypto assets.

On 6 April 2018, SARS released a statement to the media entitled “SARS stance on the tax treatment of crypto-currencies”.

In this statement, SARS reminded taxpayers to declare all crypto-currency-related taxable income during the year such income was received or accrued.

In order to assess the tax risks associated with the above activities, SARS has made contact with South African crypto-currency exchanges to request information on a selection of customers in terms of section 46 of the Tax Administration Act, 2011.

SARS has confirmed that the primary purpose of collecting this information is for risk analysis, which will inform the need for future action with respect to crypto assets.

AltCoinTrader, Luno, and VALR are three crypto-currency exchanges that have confirmed that they have received requests for transactional information in relation to a small number of customers.

“VALR takes the privacy and protection of our customer data very seriously,” says Farzam Ehsani, co-founder and CEO of VALR.com.

“VALR is also committed to being compliant with the laws and regulations that govern our business. We have engaged with SARS to express our concern for the privacy of the data of our customers and we have also sought legal advice on our obligation to comply with SARS's request. The conclusion of our legal advice is that per section 46 of the Tax Administration Act, along with other crypto-currency exchanges, we are obliged to provide the information requested by SARS."

“Luno does not share customer information with SARS on a routine or ongoing basis,” says Marius Reitz, general manager for Africa at Luno.

“More generally, and as described in Luno's privacy policy, we will only share customer data with law enforcement and other regulatory authorities when we are required by law to do so. Luno has carefully reviewed the SARS request, taken legal advice on our obligation to comply with it, and worked with SARS to ensure that its scope is limited to the greatest extent possible. We are, however, required by law to comply with the request, which is made under s46 of the Tax Administration Act.”

“AltCoinTrader has always strived to protect our customers' privacy and provide the necessary tools to enable compliance. In order for the industry as a whole to experience growth, exchanges and industry players are obliged to cooperate with regulators,” says Richard de Sousa, CEO of AltCoinTrader.

“AltCoinTrader has taken legal counsel to ensure that all information requested by regulators is within our legal obligation.”

The exchanges say crypto-currency platforms are not yet required to provide customers with tax certificates. AltCoinTrader, Luno and VALR all provide the ability for customers to download their transaction history to prepare any tax declarations that are required, they note.

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