Relying on truthfulness during tax season can be tricky. The South African Revenue Service (SARS) could turn to blockchain technology to find the solution.
It’s no secret that cryptocurrencies present a strong allure in countries facing economic and political turmoil. South Africa is one such country. Dealing with land expropriation issues, governmental-level corruption, and unemployment, it’s unsurprising that citizens are taking such a marked interest in decentralized virtual currencies.
However, as adoption and trade increases, so too does the development and implementation of regulations. The South African Revenue Service (SARS) is one authority that has made their stance clear on the issue. While not deeming them actual currencies, SARS is set on getting their due by applying normal tax rules to cryptocurrency traders. This was initially going to be implemented by having these holders honestly declare the crypto gains and losses but SARS is now looking into ways to make the process more and accurate and truthful.
The Problem Facing SARS
According to IOL, this could be done by making use of blockchain technology. Richard de Sousa, who is a partner at AltcoinTrader, gave his insight after Mark Kingon, the Acting Commissioner of SARS, discussed the organization’s need for identifying holders. Kingon explained:
The key thing is identifying people who are trading because it’s easy to say cryptocurrency gains must be deductible, but there are also those who lose. That’s why it’s 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 of the other cryptocurrencies are anonymous and perhaps they are to a certain extent but digital currencies provide even more transparency than fiat currency. According to de Sousa:
When we say the most transparent, we mean that the blockchain is open and anyone that has access to the internet can view every single transaction that takes place on the blockchain. In other words, if SARS knew the Bitcoin address that you started from, they could track every single transaction that goes out of that address and they could track it on the blockchain and track it to where you moving it to.
Crypto is not secretive it is extremely transparent, with the correct software and correct technical know-how, anyone can track 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 tracking companies including ourselves that are tracking Bitcoin and monitoring the blockchain to eliminate fraud. So yes it is already been done internationally and locally.
This is just another way that blockchain technology can be used practically in the real world. Now it’s just up to SARS to get those Bitcoin addresses.
Do you think that this type of tracking will help SARS streamline their process? Let us know in the comments below!
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