The South African government has established a dedicated regulatory working group to access cryptocurrency and blockchain concepts, as per a report of the local news outlet Business Live.
The country’s finance minister Tito Mboweni revealed that the working group includes representatives from the Financial Intelligence Centre, Financial Sector Conduct Authority, Treasury, the Reserve Bank, and the SA Revenue Service (Sars).
According to Mboweni, the working group is formed with a view to developing a cohesive response to the booming cryptocurrency industry in the country, and also to create a unified intergovernmental framework.
“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,” Mboweni stated.
Transparent Tax Laws
The South African government is also concerned about tax evasion by the crypto traders. Mboweni stated that the country’s Revenue Service will add cryptocurrency in tax forms from next year.
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“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,” he added. “Taxpayers who have made some form of declarations regarding cryptocurrency trades have captured such trade as a form of ‘other trade income’ or ‘other trade loss’, and have made reference to a description of digital/cryptocurrency trading (e.g. Bitcoin Cash, Litecoin (LTC), Ethereum (ETH), Zcash (ZEC) to name a few).”
Last year South Africa introduced the Taxation Laws Amendment Bill of 2018 which included the treatment of cryptocurrencies for income tax and VAT purposes. The proposed amendments will ensure that losses on cryptocurrencies may only be offset against profits.
The finance minister further clarified that cryptocurrencies cannot be classified as a personal asset for capital gains tax purposes and would treat cryptocurrencies as financial services for VAT purposes.
Crypto in Africa
Cryptocurrencies are getting very popular in the African countries including South Africa. Last year, African Bitcoin exchange Paxful reported $40 million in month trading, a massive number when considering the technology penetration in the continent.
Ray Youssef, Paxful’s CEO, recently stated: “The adoption of Bitcoin across the globe re-affirms our belief that crypto will take its place as a mainstream financial system. As has been the case with other tech innovations, Africa is leading the peer-to-peer financial revolution. Our aim is to continue to partner with consumers to expand access to the global financial system,”