South Africa Wants to Track and Tax Bitcoin TradingSmart Planet
It’s said that nothing in this world is certain, except death and taxes. And at least for the latter we can be sure that the powers-that-be are not going to let this change without a fight. The latest country now known to be looking at taxing bitcoin trading is South Africa.
Bitcoin use has been rapidly growing in South Africa, mostly for trading, becoming so popular people can even pay their driving tickets with the cryptocurrency. This has prompted the South African Revenue Service (Sars) to explore ways to ensure it gets its cut from all the action. The agency is reportedlyin talks with leading international technology companies to find an efficient method to track cryptocurrency trading in the country for taxing proposes.
Dr Randall Carolissen, Sars group executive for research, said: “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.”
He added that the agency is also solidifying its connection with the South African Reserve Bank (Sarb), the country’s central bank, to see how they can better match cross-border outflows and inflows of money to try and make sure people have less “room to hide things.”
Dr Carolissen explained 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.”
The South African tax man revealed that Sars is working with similar agencies from different countries on implementing new policies for tackling the issue via the Organization for Economic Cooperation and Development’s (OECD). This collaboration is said to provide them with detailed recommendations for handling cryptocurrencies.
“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,” Carolissen said.
The international interest is not surprising considering we have only recently seen the U.S. IRS, South Korea’s National Tax Service and the Income Tax Department of Indiainvolve themselves with bitcoin. It is not clear what each regulator can do to track trading involving at least one party from their country, other than force local exchanges to report all transactions and compel citizens to reveal all their trades.