With the massive acceptance of cryptocurrencies in South Africa, the country’s tax authority, the South African Revenue Service (SARS), is now finding ways to track its citizens’ cryptocurrency trades efficiently, as reported by South African website Moneyview.co.za. SARS is also in talks with a few top tech firms to make this feasible.
The exponential rise in the price of Bitcoin has made SARS think about its revenue losses, as unlike the traditional market, unregulated crypto exchanges do not have to provide customer activity reports to the tax authority.
SARS group executive for research, Dr. Randall Carolissen, 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.”
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He revealed that SARS is working with the South African Reserve Bank to track the funds moving in and out of the country along with the actual movement of goods.
“At the moment, we are treating cryptocurrency in the same way as capital realization – 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,” explained Dr. Carolissen.
The South African taxman also revealed that SARS is working on the recommendations of the Organisation for Economic Cooperation and Development (OECD), which provides detailed information on how to deal with 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,” concluded Dr. Carolissen.
The South African tax authority is not the only tax authority concerned about the loss of tax revenue from the crypto investments. The American IRS, South Korean National Tax Service, and the Income Tax Department of India have all taken steps to tax their citizens’ gains from cryptocurrency investments. The Indian tax authority even served notices to around half-a-million high net worth Individuals involved in cryptocurrency trading on unregulated exchanges.