Sudan has now made its official position on cryptocurrency taxation clear, formally incorporating cryptocurrency into the existing body of income tax laws. The Income Tax Act of 1986, along with its subsidiary regulations, now encompasses cryptocurrency gains under the umbrella of "miscellaneous income." This is a positive step as it gives individuals and businesses a better picture of how various digital assets will be taxed within the country. Sudanese taxpayers are required to now declare their income from crypto activities through specified channels. That way, they stay on the right side of our nation’s tax laws.

This framework establishes a 15% income tax rate on net crypto profits for individuals. Corporations that go all in on crypto will be taxed at a new 35% corporate tax rate. To ensure proper reporting, taxpayers should fill out Form F15 with a Crypto Annexe listing every transaction in crypto. The state’s general income tax rate remains unchanged. There is a pernicious proposed 2% withholding tax on large fiat crypto cash-outs. Sudan has made aggressive moves to bring cryptocurrency into the country’s formal financial sector. They are laying the groundwork for appropriate taxation and regulatory oversight of this novel mode.

Crypto Taxation Under Sudan's Income Tax Act

The foundation of Sudan’s crypto tax policy is the Income Tax Act of 1986. This act broadly expands what is considered taxable income. It now has an “other income” category that specifically allows taxpayers to report taxable cryptocurrency gains. This effectively means that all profit made from capital gains, crypto trading, crypto investing, and any other transaction involving cryptocurrencies are liable for income tax.

Within this framework, any Sudanese taxpayer who has taken income in crypto would need to report that income as part of their standard annual filing. The Income Tax Act provides the technical underpinnings for taxing these gains. This will help it make sure crypto activities are taxed the same way as any other types of income in the Sudanese tax system. Sudan has opted to fold cryptocurrency under existing tax laws. This action will simplify tax collection and create an obvious legal route to taxing cryptocurrencies.

Sudan requires taxpayers to report their crypto income on Form F15. To start, they should pay attention to the “Miscellaneous and Investment Income” section of the form. This form now has an additional Crypto Annexe, or Schedule C-DX. It forces you into a system where you must report extremely granular information on every single crypto transaction. This data shows the date of each transaction, what token type was traded, how much was traded in quantity, and its value in SDG. It further identifies the specific counterparty or exchange entity with which the trade occurred.

This new and specific reporting requirement provides tax authorities a comprehensive picture of a taxpayer’s crypto transactions. Most importantly, it allows them to calculate tax liabilities more precisely. The Crypto Annexe is a great place to get all the important deets. This proactive approach minimizes the risk of underreporting and boosts the transparency of crypto taxation in Sudan.

Key Tax Rates and Regulations

For individual taxpayers the net crypto profits tax has an extremely high and fixed rate of 15%. This 15% rate is on the net profit after subtracting any allowable expenses and losses directly connected to crypto activities. This simple and direct method helps minimize the burden of tax calculations for individuals, reducing the steps needed to meet tax obligations.

Corporations that are heavily involved in cryptocurrency activities are subject to the standard corporate income tax rate of 35%. This much higher rate is consistent with the well-established rule that corporate profits are taxed at a lower rate than personal income. This important distinction prevents businesses that work in the crypto space from being taxed differently than other corporations under our corporate tax framework.

A few more detailed regulations elaborate on the tax treatment of crypto transactions. For tax purposes, crypto-to-crypto swaps are considered two separate disposals, which means that each swap is treated as a taxable event. This entails taxpayers reporting the fair market value of each cryptocurrency, converted to Sudanese pounds, on the date of trade. This rule ensures that all crypto transactions are accurately valued for tax purposes. It is irrelevant, even for the transactions with fiat currency.

Currently, mining and staking rewards are taxed as ordinary income. Taxpayers that mint or stake their crypto need to declare their rewards as taxable income. The rules permit the accelerated depreciation of mining equipment over three years. This provision further underscores the heavy capital investment required for mining operations. It provides a method to recoup these expenses through depreciation deductions.

Incentives, Penalties, and Compliance Measures

Sudan’s current crypto tax framework incorporates a de minimis exemption, offering tax relief to those trading on a small-scale basis. If your aggregate crypto gains are below SDG 100,000 (roughly USD 200) for the year, you owe no taxes on those profits. This means taxpayers in that income range can automatically claim this exemption. This exemption is meant to reduce the tax burden for amateur or hobbyist crypto traders. In so doing, it brings millions more into the digital economy without burdening them with unwarranted or harmful tax liabilities.

To promote increased compliance with the tax code and prevent tax evasion, Sudan has introduced severe sanctions against non-compliant taxpayers. Taxpayers who fail to report their taxable cryptocurrency income can face harsh penalties. Failure to do so can incur a penalty of up to 200% of the unpaid tax owed, in addition to accumulating interest penalties. This steep fine would strongly disincentivize underreporting or hiding crypto earnings.

In some harsher instances of tax evasion, the 2022 Tax Offences Act allows for harsher punishments. If you intentionally fail to pay taxes of at least SDG 10 million (approximately USD 20,000), the penalties can be severe. This would make such a choice punishable by incarceration for one to three years. This provision highlights how seriously Sudan takes the crime of tax evasion, especially when evading a large crypto income.

The Office of Tax Analysis would on one hand like to see a proposed 2% withholding tax on large crypto-to-fiat cash-outs. This tax would go into effect for annual cash-outs over USD 50,000. This measure looks to avoid a new source of tax revenue when individuals exchange crypto assets for fiat currency. Third, it helps to make sure that big transactions are being taxed in the right way.

To improve compliance exchanges in Sudan should be required to provide year-end statements to their clients. This requirement is consistent with the Anti-Money Laundering (AML) reporting bedrock principles of. These end-of-year statements give each user an annual account of their capital gains and losses from their crypto activities. This simplifies the process for taxpayers to report their income and empowers tax authorities to more easily verify income reported.

Cryptocurrency trading losses have the ability to shelter other gains you have made during the same year. To make matters worse, these losses can be claimed retroactively for up to three years to reduce capital gains made in the future. This is a welcome change as the provision serves to meaningfully offset the tax burden that traders with losses might otherwise face. Most importantly, it recognizes the crypto market’s inherent volatility.