The South African government has established a regulatory working group to investigate all aspects of cryptocurrencies and related blockchain concepts.
In a written reply to a parliamentary question by Freedom Front Plus MP Wouter Wessels, South African finance minister Tito Mboweni said that the working group, which includes representatives from multiple South African agencies, will develop a cohesive governmental response to cryptocurrencies and a unified inter-governmental regulatory 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 said.
Mboweni further said that the South African Revenue Service (SARS) is considering 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.
“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/crypto currency trading (e.g. Bitcoin Cash, Litecoin (LTC), Ethereum (ETH), Zcash (ZEC) to name a few),” Mboweni said.
In July 2018, South Africa’s National Treasury published the 2018 Draft Taxation Laws Amendment Bill (DTLAB), which details how cryptocurrencies should be treated when it comes to filing income tax and VAT records in the country.
“These amendments would ensure that losses on cryptocurrencies may only be offset against profits from cryptocurrencies (otherwise known as ring-fencing),” Mboweni said. “The amendments would also clarify that cryptocurrencies cannot be classed as personal-use assets for capital gains tax purposes and would treat cryptocurrencies as financial services for VAT purposes.”
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