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Economics and regulation
South Africa's finance minister, Tito Mboweni, explained in a letter dated 2 January that the government of the region has created a regulatory working group dedicated to cryptocurrencies. According to Mboweni, the working group includes representatives from various South African agencies and aims to produce a complete regulatory response to the growing economy of digital resources.
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The South African regulatory working group aims to provide a coherent regulatory response to cryptocurrencies
The economy of cryptocurrency has grown significantly in South Africa, according to several studies conducted last year. Last November, the research commissioned by the company Luno indicated it 70 percent South African consumers define digital currencies as an investment, with respondents who say they also hold long-term cryptocurrencies. The Paxful peer-to-peer exchange saw an increase of 25% in 2018 and of Localbitcoin volumes inflated also. The South African government has noted the upward trend and members of the SA Revenue Service (SARS), the South African Reserve Bank, Treasury, Financial Sector Conduct Authority and Financial Intelligence Center have formed a cryptocurrency working group to better understand the situation.
In a written letter In parliament, Finance Minister Tito Mboweni explained that the new regulatory group will devote resources to a government response to cryptocurrencies and the economy surrounding technology. In addition, Mboweni detailed the group's plans to publish a study of its findings and some of the ideas of the working group towards a unified cryptocurrency regulatory standard across South Africa.
"It is expected that, following the commentary and the participation of the sector, the normative working group on cryptographic resources will be ready to publish a final research paper on the subject in the course of 2019", underlined Mboweni in his letter to Parliament.
Mboweni: "The cryptovalutation is still difficult and requires reform"
The finance minister and former governor of the South African Reserve Bank also explained that Sars was struggling to track the number of capital gains and losses declared on investments in cryptocurrency during the year the declaration forms were collected income. Mboweni believes that provisions should be added so that South African taxpayers can declare the gains and losses annually recorded by citizens with these types of financial instruments.
"Work is under way in Sars to consider changing tax forms for the 2019 fiscal season in order to provide for the description of other assets (which will include cryptocurrencies) through a specific description field on the form," noted Mboweni .
The Minister of Finance continued:
Taxpayers who made some kind of declaration regarding cryptocurrency negotiations have captured this trade as a form of "other commercial revenue" or "other commercial loss" and have referred to a description of digital trading / cryptocurrency (e.g. money in bitcoins (BCH), litecoin (LTC), ethereum (ETH), zcash (ZEC) to name a few).
The recent law on the amendment of the tax laws of 2018 specifies how cryptocurrencies should be dealt with when it comes to completing the tax return and VAT registrations in South Africa. Mboweni concluded that the amendments proposed in that law would lead to greater efficiency at the tax office, as cryptocurrencies grow more popular in the region. Furthermore, Mboweni noted that the changes should clarify whether cryptocurrencies may or may not be classified for personal use or for taxes that entail capital gains.
What do you think of the government of South Africa that creates a working group to better regulate cryptocurrencies? Let us know what you think of this topic in the comments section below.
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