South Africa’s tax authority has proposed new guidance that clarifies how crypto assets are taxed under the current income and capital gains tax framework.

The South African Revenue Service (SARS) on Wednesday published Draft guidelines on crypto-asset taxation, implementing South Africa’s existing tax framework, primarily the Income Tax Act, 1962, together with capital gains tax rules.

The draft provides that most crypto activities, including trading, exchanges and expenditures, are generally treated as dispositions that may trigger tax events. It still emphasizes that the rules depend heavily on the specific circumstances of each taxpayer.

If adopted, the proposed guidelines are set to affect millions of local consumers as SARS. Reported At least 5.8 million inhabitants held crypto assets in 2024.

Crypto is considered an asset, not a currency.

gave guidance The document reiterated that crypto-assets are not legal tender or foreign currency, but intangible assets for tax purposes.

“The preferred interpretation of the legal nature of crypto-assets is that, although highly versatile and negotiable, they are not ‘currencies’ and consequently not ‘foreign currencies,'” the agency said.

Source: Sars

Intent of the taxpayer as a key factor

The guidelines place significant emphasis on taxpayer intent when determining how crypto is taxed.

According to SARS, whether a person is classified as a trader or a long-term investor depends on their behaviour, the frequency of transactions and the purpose of holding the asset.

An excerpt of how taxpayer intent is determined, according to the proposed guidelines. Source: Sars

“It is important to consider the taxpayer’s intent at the time of acquiring the asset, at the time of selling the asset, and at the time of holding the asset, as the taxpayer’s intent regarding the asset may change over time,” the authority said. SARS added that this requires a broad assessment of all the relevant facts and circumstances.

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The guidelines also state that crypto-assets may be subject to South African donation tax, as assets are considered “property” under tax law, with tax rates ranging from 20% to 25% depending on the value of the donation.

Public input is open until August 31.

The draft guidance is not final law and is open for public comment until August 31. SARS said it was intended to seek to provide interpretive clarity rather than introduce new legal obligations.

South Africa has emerged as one of the largest crypto markets in Africa. According to an October 2024 report by Chainalysis, the country received About $26 billion in crypto value has been studied over a one-year period.

The channel analysis also found that institutional and professional-sized transactions were the largest contributors to overall value received, particularly from the end of 2023 to the first quarter of 2024, highlighting a shift towards larger and more structured market activity.

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