As Bitcoin crosses one boundary after other, it is bringing along two associated circumstances. Firstly, people who haven’t invested yet in the cryptocurrency sphere are rushing ahead especially out of the fear of missing out (FOMO) and secondarily the government and regulatory bodies are looking out for imposing taxes on this lucrative paradigm which holds immense potential.
The latest addition to the growing list of countries who are pondering over the taxation of Bitcoins is South Africa. Usage of Bitcoin has reached indomitable heights in the African peninsula and is being used rapidly for trading purposes. People are evening paying for their driving tickets using cryptocurrencies. This has propelled the South African Revenue Service (SARS) in exploring ways of bringing upon regulations to benefit from this growing bubble. It has been reported that the agency is in conversation with the biggest international technology companies for finding out an effective method of tracking cryptocurrency trading for taxation purposes in the country.
SARS group executive for research, Dr Randall Carolissen was recently quoted as saying that,
“As you can imagine it is very difficult – the blockchain technology. Without revealing too much – we are talking to some of the top technology companies in the world that are doing similar work for Canada and the UK and we are hoping to get that technology.”
Dr Randall also pointed out that the agency is strengthening its connectivity with the country’s central bank, South African Reserve Bank (SARB) for finding out how they can match cross-border inflows and outflows of money in a better way and ensure that people are not left with much “room to hide things.” This was explained by Dr Randall who enumerated that,
“At the moment, we are treating cryptocurrency in the same way as capital realisation – so in other words, it is like a Krugerrand. If you buy it at a particular point and you then sell it, you will be faced with a capital appreciation and then we will treat it as Capital Gains Tax.”
It has been revealed by the South African tax man that SARS is collaborating with agencies from across the globe for bringing about new policies directed at tackling the issue through the Organization for Economic Cooperation and Development’s (OECD). Detailed recommendations pertaining to the usage of cryptocurrencies is expected to be provided to them by this budding collaboration.
Dr Randall has stated that:
“We were part of the OECD working groups and that has certainly been incorporated into our policy environment. So we are on top of it. In fact, South Africa is cited as one of the leading implementers of this cryptocurrency environment.”
Such a level of international interest has not come as a surprise given the fact that we have every recently seen Income Tax Department of India, South Korea’s National Tax Service and U.S. IRS come ahead with the taxability frontier of Bitcoins and related cryptos. The actual footsteps to be taken by each such regulator has not yet been made public till now. However, it is expected that such regulators would make it mandatory for crypto exchanges to submit a report of all transactions and compel citizens for revealing their trade practices for thorough scrutiny.
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Tarunima Ghosh Laha is a Finance Post Grad from St. Xaviers who believes Finance is more than just Balance Sheets and Ledger creation. This filmy bookworm who believes she was a sloth in past life also nourishes a penchant of owning a private zoo someday. Equipped with a laptop and online Lexicon she is all set to give finance a glamorous makeover in the form of exciting writeups with bang on info and flashy new words.