Reports from South Africa suggest that tax authorities have fixed a loophole in the online tax filing system that has allowed crypto arbitrage traders to make multiple purchases on cryptocurrency platforms at overseas using a single approval. As a result of these adjustments, crypto arbitrage traders are now forced to create a new app every time they need to place an order. In addition, this change also effectively excludes daily arbitrage trades.

Clogged scale

Like Moneyweb’s publication report explains, some South African cryptocurrency traders are known to “take advantage of differences in the price of crypto assets on local and foreign exchanges.” The price differences have ranged between zero and three percent in recent months.

However, according to the report, South African crypto traders can exploit these differences using their annual Foreign Investment Allocation (FIA) of nearly $ 700,000 (Rand 10 million). They can also take advantage of these price differences by using their Special Discretionary Allowance (SDA) of around $ 70,000 per year. For traders using their FIA allowance, however, a tax clearance from the South Africa Revenue Services (SARS) is required.

Once this initial approval is given, crypto traders could gain subsequent approvals “by going online and hitting a ‘Refresh’ button on the Sars website.” However, SARS has now updated its e-filing system and now “whenever the refresh button is pressed the pin remains unchanged”.

Changes affecting the frequency of transactions

Meanwhile, the Moneyweb report further reveals that a South African crypto exchange, Valr, has already notified its customers of the changes. Valr said:

The implication of this is that the updated FIA Pins will not be accepted as valid Pins for arbitration purposes and a whole new AIF request will have to be made in order to conduct further arbitration exchanges under AIF once the original FIA Pin will be exhausted.

In addition, the CEO of the exchange, Farzam Ehsani, was quoted warning clients that they must now “wait until every AIF application is approved before trading”. However, Jon Ovadia, CEO of Ovex, a cryptocurrency broker, also cited fears that changes to the e-filing system could affect his business. He said:

We never used the Pin’s automatic renewal system because we know that Sars didn’t like this system. [even though it made it available to the public].

What do you think of the changes brought about by SARS? Let us know what you think in the comments section below.

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