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Tax authorities in South Africa are said to have patched up a flaw within the country’s online tax filing system where it enables crypto arbitrage traders to make purchases on offshore cryptocurrency platforms that utilize a single approval. Welp, it may well seem that the nation’s revenue service has officially made it a burden to their tax-paying citizens to get approved on these crypto arbitrage trades using their annual R10 million foreign investment allowance.
South Africa’s eFiling system update
It has been observed that the South African Revenue Service (SARS) may have done some tinkering on its eFiling system where users – whenever they hit the refresh button – the PIN that was initially there will remain.
In line with this, the crypto exchange known as VALR sent out a memo to their clients this week stating that SARS’ recent update would only mean that local banks there will have no way of distinguishing the difference between old and new PINs. These PINs are generated to send a similar capital that is originally applied for an FIA application to a so-called international beneficiary.
Additionally, it also stated that the implication of such is that refreshed FIA pins will not be accepted as valid pins for the sole purpose of arbitrage trading and an entirely new application of this will need to be done in order to conduct further arbitrage trading under FIA once its original pin has been exhausted.
Crypto arbitrage penchant
Crypto arbitrage has grown to be a penchant for South African traders to profit from differences in crypto asset prices on both local and offshore exchanges. The said price variation has a range from zero to three percent in the past several months.
It is said that they have this requisite of purchasing cryptocurrencies like bitcoin (BTC) on foreign exchanges and at the same time utilize either their “special discretionary allowance (SDA)” of one million Rands a year or their FIA amounting to 10 million Rands a year. Next is to buy these cryptos overseas and then ship them to South Africa and sell them at a steeper price. Now that’s some big brain moves right there.
As for the SDA, there are no further permissions required on this part. However, South Africans are putting into good use the R10 million FIA require tax clearance from SARS. Trades in this manner are mostly in the lots of either R100,000 or R200,000, as these need several approvals from SARS until the recent update.
Little impact on the crypto arbitrage opportunity
Now that this tweak to SARS’ eFiling system is in full swing, cryptocurrency prime broker Ovex’s CEO – Jon Ovadia said that this has caused time delays though pointed out that the opportunity in crypto arbitrage was not even reduced. Further, the CEO explained that they never used the automatic pin renewal system since their firm is well aware that SARS is not a fan of such a system.
Ovex is said to be doing FIA applications manually minus the above-mentioned system. This means their applications were paper-based, sluggish, and trades done in this manner are lesser. Since the new update has a minute impact on their crypto arbitrage operations, Ovadia revealed that their firm has been working with the said South African tax agency “on a better system that they are happy with.”
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
