The South African government has open-mindedness towards developing the blockchain industry in the country. A regulatory working group has been reportedly set up to study cryptocurrency and the underlying blockchain technology, as reported by local media news outlet BusinessLive.
Representatives from the Financial Intelligence Centre, Financial Sector Conduct Authority, Treasury, the Reserve Bank, and the SA Revenue Service (Sars) were selected to make up the working group.
According to the news outlet, finance minister Tito Mboweni was quoted saying that the aim was to develop “a cohesive governmental response to cryptocurrencies and a unified intergovernmental regulatory framework,” adding that a “final research paper on the subject [will be released] during the course of 2019.”
While the current income tax return forms do not take into account profits from cryptocurrency related trades, Sars applies normal income tax rules to cryptocurrencies for those who have declared their asset holdings related to cryptocurrencies. More so, efforts had been earlier coordinated to ensure that cryptocurrency investors do not evade tax payments. This has been difficult due to the anonymous nature of exchanging cryptocurrencies on blockchain-based platforms.
The source further clarified that Mboweni noted that “Sars is unable to accurately trace the number of declarations pertaining to capital profits on cryptocurrencies,” this platform may as well provide an opportunity to draw out a comprehensive tax-inclusive model for crypto-related transactions. In line with the tax inclusion of digital asset class, he said:
“However, work is underway within Sars to consider the amendment of the tax forms for the 2019 tax season in order to cater for the description of other assets (which will include cryptocurrencies) by means of a specific description field on the form.”
Mboweni was also quoted saying that the Taxation Amendment Bill of 2018 which also include a clause for cryptocurrencies to be treated for Income Tax and VAT, and the amendment would allow losses on cryptocurrencies can be offset against profits from cryptocurrencies only.
Taking steps towards regulating the blockchain and cryptocurrency industry can mean a lot of goodwill for the South Africans, as a good number of them are already exposed to the industry and some of them wished they had gotten in early onto the crypto-train. Comparatively, other African nations are still either indecisive or discouraging their citizens from taking part in anything cryptocurrency related.
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