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Relying on the veracity during the tax season can be complicated. The South African Revenue Service (SARS) could switch to blockchain technology to find the solution.
It is no secret that cryptocurrencies have a strong appeal in countries that face political and economic unrest. South Africa is one of these countries. Addressing issues related to land expropriation, government corruption and unemployment, it is not surprising that citizens are taking such a marked interest in decentralized virtual currencies.
However, with the increase in adoptions and exchanges, the development and implementation of the regulations also increases. The South African Revenue Service (SARS) is an authority that has made their position clear on the issue. Even if they are not considered as real currencies, SARS is set to obtain the due amount by applying the normal tax rules to cryptocurrency traders. Initially this would have been implemented by making these owners honestly claim crypto gains and losses, but SARS is now examining ways to make the process more accurate and truthful.
The Problem before SARS
According to IOL, this will be done using blockchain technology. Richard de Sousa, who is a member of AltcoinTrader, gave his opinion after Mark Kingon, the SARS Acting Commissioner, discussed the need for the organization to identify the owners. Kingon explained:
The key thing is to identify people who trade because it's easy to say that cryptocurrency gains must be deductible, but there are also those who lose. This is why it is important to identify the trader.
Blockchain as a Solution
In response, de Sousa spoke about the main idea behind the creation of virtual currencies: transparency. Some people would say that Bitcoin and most other cryptocurrencies are anonymous and perhaps to some extent, but digital currencies provide even more transparency than legal money. According to de Sousa:
When we say the most transparent, we mean that the blockchain is open and anyone with access to the Internet can view every single transaction that takes place on the blockchain. In other words, if SARS knew the Bitcoin address from which it started, it could track every single transaction coming out of that address and could track it down on the blockchain and track it where it was moved.
He continued:
Crypto is not secret, it is extremely transparent, with the correct software and the correct technical know-how, anyone can keep track of these transactions because they are on a public ledger.
De Sousa added that this type of tracking is already being implemented:
I am aware of private monitoring companies, including ourselves, who are monitoring Bitcoin and monitoring the blockchain to eliminate fraud. So yes, it has already been done internationally and locally.
This is just another way in which blockchain technology can be used in virtually the real world. Now it's up to SARS only to get these Bitcoin addresses.
Do you think this kind of tracking will help SARS to simplify their process? Let us know in the comments below!
Images courtesy of ShutterStock
