South African Revenue Service Has Their Eye on Your Bitcoins
The South African Revenue Service (SARS) is showing a keen interest in monitoring crypto trading in the country through blockchain-based technology.
SARS has a fickle relationship with the people of South Africa, which is quite common between the average person and the tax man. South African citizens have to submit a (hopefully) true and honest financial declaration, which could result, depending on the information given, in said citizens paying SARS a certain amount of money. However, this information is also used for verification purposes to see if a person lies about their income.
Banks and other financial institutions are also required to give SARS their clients’ investment information in order to verify their declaration. This is where it gets interesting. As with most countries, South Africa does not have any regulations or processes in place with regard to cryptocurrencies and any possible gains due to the virtual currency rising in value. Essentially, they will just have to rely on South Africans being honest about how much profit they’ve made off of crypto.
Uncle SARS Wants You… to Declare Your Cryptos
Seeing as SARS banks on this information, and resultant funds, to keep revenue flowing for the South African government, it stands to reason that they would like to be able to track crypto trading. According to Moneyweb, this is exactly what they plan on doing. Dr Randall Carolissen, SARS group executive for research, had this to say:
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 went on to add:
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.
SARS is taking it one step further by teaming up with the country’s reserve bank (SARB) to evaluate cash flow, so as to determine if the amount of money leaving the country matches the amount of goods coming into the country. The institution is also working with the Organisation for Economic Cooperation and Development (OECD) to put a system in place.
Blockchain-Based Technology Will Be Used
In July this year, Loerien Gamaroff, who is the CEO of South African blockchain-based solutions provider Bankymoon, confirmed that they were in discussions to test these possible new regulations. He had this to say at the time:
All we are doing at this point is seeing how far this relationship will go on within this sandbox. This is because the Reserve Bank is very hesitant to give a stamp of approval on anything that comes out. The sandbox will only be Bitcoin-focused during this initial phase, but is focused on applying broad regulations to all cryptocurrencies.
South Africa is the latest emerging market that will be implementing crypto regulations. However, it seems to be more of a self-preserving effort for SARS to ensure that the country’s revenue doesn’t disappear with the country’s increase in crypto trading.
Do you think more countries will follow suit by applying crypto regulations? How do you think this will influence the price of digital currencies? Let us know in the comments below!
Images courtesy of Pexels and Bitcoinist archives.