👨🏿‍🚀TechCabal Daily – Evading crypto taxes? Bad idea

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A new stream of searches for the Meta ray-ban glasses have been driving up the popularity of the hardware. While people are rediscovering the Meta Ray-Ban glasses—that first released in October 2023—for its 12 MP ultra-wide camera and integrated AI support for people with low vision, another Meta technology, the Quest 3S, gave the tech community more to ponder.

Designed to blend the real world with the digital world, the new Quest 3S VR headset offers a better in-game experience as it uses the same chipset as the earlier-released Quest 3. On the Snapdragon XR2 Gen 2, load times and processing speeds are faster, yet, one noticeable flaw, according to tech reviews, has shown that Meta used the inferior lenses on the Quest 2 to cut corners on display quality.

However, the Quest 3S is cheaper. Perhaps this is the price you pay for affordability? For $200 less, it looks like it. Meta is just another leap closer to sitting atop the throne in its hot pursuit of capturing major market share in the $4.4 billion mixed reality market.

Crypto tax evaders could face jail time, says SARS

South African Revenue Service (SARS) has warned crypto holders and traders that they could be penalised, or worse, face jail time for failing to declare crypto assets on tax returns.

The tax collector confirmed it has teamed up with the Financial Sector Conduct Authority (FSCA), the financial markets regulator, to get information on asset holdings from local exchanges. While exchange platforms like Luno have stated that “it shares specific client data only with third-party service providers,” it could still be compelled to share information with persistent regulators in South Africa where it received a Virtual Asset Service Provider (VASP) licence in April.

This could spell big trouble for anybody caught underreporting their crypto assets under the country’s Voluntary Disclosure Programme (VDP) where citizens report their taxable incomes.

While crypto has previously been the dark horse of financial assets, regulators across Africa are starting to realise that there is a high rate of tax non-compliance due to the anonymity of crypto. Since it was not regulated, the government couldn’t tax it; people moved their holdings to crypto and those who had the means, mined more crypto without tax consequences. South Africa joined the top thirty countries globally with the highest crypto uptakes.

In South Africa, the move to tax crypto started in 2018 after the regulator released a statement to tax crypto under income taxes. The country uses a progressive income tax rate, which has been adjusted throughout the years.

Depending on the annual income, taxpayers pay a minimum of 18% on declared assets, and up to 45% in taxes. They earn back R17,235 ($980) through primary rebates. So, if a citizen declares R1,000,000 ($56,850) on their crypto assets, they’d pay R292,884 ($16,650) in income taxes.

Other African countries like Nigeria, and recently Kenya, have announced plans to tax crypto users as they continue to find ways around formally regulating crypto. While it is still unclear whether these African countries are ready to regulate crypto as a legal financial asset, Kenya will choose an automatic approach, compared to South Africa, to tax crypto traders in real-time across every transaction.

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In 2014, East African countries started talking about interoperability, which would allow customers to seamlessly transfer money and make payments between different banks and financial institutions within the region.

Kenya took a stab at it with the launch of Pesalink in 2015 which connected various banks and financial institutions, allowing for instant transfers and payments between them. However, PesaLink was only limited to local bank payments, excluding fintechs, mobile money, Saccos, and MFBs.

In 2018, the Central bank of Kenya (CBK) implemented the interoperable person-to-person payment systems, allowing customers to seamlessly transfer funds between different banks. The CBK further enhanced interoperability in 2022 by enabling seamless merchant payments.

While the bank might have made solid progress by linking multiple local banks and merchants, there was no single payment system that connected multiple payment channels.

In February 2024, the regulator began talks with industry players on a new payment system and to develop a Fast Payment System (FPS) that will allow instant transactions across all financial institutions, including banks and payment service providers (PSPs).

While the CBK is yet to announce the date for the launch, many are questioning why the CBK is opting to build a new system instead of enhancing the existing Pesalink platform. Implementing a new real-time system could take a few years. Critics also argue that investing in and improving Pesalink would be a more efficient and cost-effective approach to achieving nationwide interoperability.

Another blocker facing the establishment of the FPS is that there has been a lack of cooperation and goodwill among key players. Safaricom, the dominant mobile money provider, has been particularly vocal in criticising regulators for allegedly favouring rival companies through their push for interoperability. 

Olayemi Cardoso, Nigeria’s central bank governor, in a fireside chat said on the sidelines of the Nigerian Economic Summit (NES30) on Wednesday that Nigeria is on the right track to see positive economic changes soon. While that optimism might take a while to reach, the CBN chief has urged cynics that this is not the time to wrinkle noses.

“We should accept that we are in a monolithic economy. We should accept that any movement and shocks in a monolithic economy are bound to cause more pain. I think that’s just it, and we should accept it.”

Cardoso stated that he inherited the CBN responsibility with over $7 billion in foreign exchange backlog during a “challenging time” where many Nigerians lost confidence in the naira. The dollar demand helped fuel the process of the naira losing its value. 

In 2024, the regulator has preferred to do things by the books, choosing orthodox economic approaches to stabilise the naira and manage inflation. Across the four monetary policy committee (MPC) meetings in 2024, the CBN has hiked interest rates at all times—increasing the cost of borrowing—as the head inflation rate continues to wobble. Yet, core inflation, which excludes food and energy prices, has not slowed.

“Higher interest rates, while painful for borrowers, are necessary to curb excess money in circulation and control inflation. Leadership is about making hard choices to secure long-term stability over short-term comfort in moments like these,” Cardoso said in a statement after the last MPC meeting.

In the banking sector, Cardoso mentioned that more than half of the banks in Nigeria were hit with the currency devaluation. 

“There was a need for banks to actually increase their capital, to create buffers, and to ensure that they have a strong, resilient banking system that will take us to the one trillion dollar GDP that is projected by the president.”

The regulator issued a directive for banks operating at international, local, and regional levels to raise their capital before March 2026. Five banks have already hit this target.

Cardoso has re-stated his intention to run an efficient, transparent banking system and collaborate with partners to create the right tools and support systems—especially in remittances and the regulatory structure of the IMTOs—to enable the youth to thrive.