A day after we reported New York state’s venture to set up a cryptocurrency task force, the South African government took a similar step to appoint a working body aimed at studying cryptocurrency and blockchain concepts. This was reported by Business Live on 02 December 2019.
South African finance minister Tito Mboweni headlined that this group includes members from the Financial Sector Conduct Authority, Financial Intelligence Centre, Treasury, the Reserve Bank and the SA Revenue Service (Sars).
Mboweni further added that this coming together as a group was to address the nation’s growing affinity for the cryptocurrency. He also mentioned a uniform system of governance and regulation that would streamline crypto transactions between governments.
“It is anticipated that, following broad industry comment and participation, the crypto assets regulatory working group will be ready to release a final research paper on the subject during the course of 2019.”
The finance minister said that in order to foster transparent taxation laws, the country’s Revenue Service will append cryptocurrency in tax forms from next year. Such measures are to abate fears of tax evasion by large volume crypto traders in the country.
The local news outlet Business Live captured Mboweni’s concern of scarcity in tracing income tax declarations related to cryptocurrency profits. The forms are not providing provision to record digital coin related businesses.
The Sars has already started the work to amend the tax forms, Mboweni emphasized. The forms would be revised to capture the essence of ‘other assets’. These other assets would include cryptocurrencies.
The Sars would introduce sections like ‘other trade income’ or ‘other trade loss’ in the tax documents. Taxpayers would be able to seamlessly fill details either on digital tokens or cryptocurrencies like Bitcoin, Ethereum or other Altcoins.
The South African government enforced the Taxation Laws Amendment Bill in 2018 which introduced guidelines for fair treatment of cryptocurrencies for income tax purposes. The amendment bill clearly defines ways to handle cryptocurrency profits and losses.
Mboweni further clarified that cryptocurrencies cannot be justified as personal assets and be taxed under capital gains. Instead, the digital coins fall under the bracket of financial services and are liable for the value-added tax.
This great news comes at the right time when cryptocurrencies are getting a mass appeal in the African continent, including South Africa. In 2018, African Bitcoin exchange Paxful reported monthly trading volumes in excess of 40 million U.S. dollars.
The African countries would definitely benefit from such deals which percolate cashless economy. The continent is already reeling under inflation and cash crunch which can be solved with the boon of cryptocurrencies.