Legal Compliance & Taxation Outlook Of Africa - Espay Exchange - PowerPoint PPT Presentation

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Legal Compliance & Taxation Outlook Of Africa - Espay Exchange


Interest in Cryptocurrency is progressively growing in Africa. According to some economists, it is a disruptive innovation that will blossom on Africa. If you are planning to establish a white label crypto exchange software development company or white label crypto exchange, you need to have a look at the Cryptocurrency compliance that this continent has to offer. – PowerPoint PPT presentation

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Title: Legal Compliance & Taxation Outlook Of Africa - Espay Exchange

  • Here is where your presentation begins

  • The government of Africa has been a bit slow with
    the adoption of cryptocurrencies. Maybe it is due
    to the reasons like good attentions of protecting
    their people or having a crop of old leaders who
    have not to envision a future without paper cash,
    Africa is now slowly picking up the pace towards
    the era of Cryptocurrency.
  • The majority of the younger generation of the
    popular countries of Africa, like Nigeria, Kenya,
    Egypt, and South Africa, is investing their time
    in the Bitcoin Technology, disregarding the
    regulation skepticism on the continent.
  • The Central Bank of Nigeria has kept itself away
    from the Bitcoin movements twice and even warned
    the citizens that bitcoin investments had no
    legal intention. Furthermore, there seem to be no
    crypto exchanges established in Botswana. Bitcoin
    trading is also restricted to private Facebook
    and Whatsapp groups. The Bank of Gana also
    announced that use and trading Cryptocurrency is
    illegal yet or it is not considered as a lawful
    form of currency in the country. However, the
    Governor of the Bank of Ghana has issued Payment
    Systems and Services Bill, which will enable the
    regulation of Cryptocurrency in the future.

  • The Central Bank of Nigeria first reacted to
    virtual currencies in January 2017 and warned the
    citizens to handle cryptocurrencies at their own
    risks. Some of the people misunderstood the
    warning as a ban, but officials of the Bank have
    since declared that they cannot put a full stop
    on the usage of Bitcoin because it is quite
    evident that they are not within their control.
  • South Africa, Ghana, and Nigeria are amongst
    those countries that have managed to count
    amongst the top 10 ranked names for Bitcoin
    technology across the globe.
  • In the following section, we have discussed the
    Cryptocurrency regulation outlook in these
    African countries along with a few others. Lets
    get started!

South Africa
  • The government in South Africa is less strict
    regarding the trading of the Bitcoin. The South
    African Revenue Services has been discovering
    many ways in which Cryptocurrency investments can
    be appropriately taxed. In April 2018, SARS
    (South African Revenue Services) stated that the
    citizens of South Africa should reveal their
    income derived from Cryptocurrency investments as
    an integral part of their capital profit
  • SARS also argued that cryptocurrencies must be
    taxed based on the intention with which they are
    being held. Therefore, profits and losses
    regarding cryptocurrencies can be widely
    categorized as having three major outcomes that
    are mentioned as follows

South Africa
  • Investors trading cryptocurrencies on exchanges
    will be liable for the capital profits earned
    during investments. 
  • A Cryptocurrency can be obtained via mining but
    until the newly obtained Cryptocurrency is
    exchanged or sold for cash, it will be managed by
    the miner as trading stock.
  • The normal barter transaction regulations will
    apply where services are exchanged for

  • In January 2018, the Bank of Ghana declared that
    buying and selling Bitcoin in the Country is not
    yet lawful as it isnt a recognized lawful
    tender. The BOG also wants to notify the citizens
    that these activities in digital currency are
    licensed currently under the Payments System Act
    2003. Currently, the Bank is investing a lot of
    resources to modify further the settlements and
    payments system, including e-form of money and to
    launch cybersecurity guidelines to protect online
    financial transactions.
  • In this country, more than 80 percent of
    landlords lack official title deeds with Ghanas
    Land of Commission and most of the land is being
    held via verbal agreements. In order to solve
    this issue, start-up Bitland of Ghana is making
    use of blockchain technology to mirror official
    title deeds, elevating the integrity of the land
    records that are held by the Land Commission of

  • Digital currencies remain booming in Kenya. The
    law of Kenya does not have a regulatory
    framework for a blockchain. However, the National
    Land Commission of Kenya has welcomed the idea of
    blockchain network usage in creating transparency
    of land ownership, since it will boost fraudulent
    sales of land and blur over the title to land.
  • After the governor of Central Bank of Kenya
    compared bitcoin to a pyramid scheme in 2017,
    there are some proofs that the bank may be
    wishing to soften its position going forward. In
    2018, President of Kenya, Uhuru Kenyatta had
    directed that AI taskforce and Blockchain can be
    created to discover the utilization of these
    technologies with the existing economic framework
    of Kenya. Furthermore, the Capital Market
    Authority, and Central Bank of Kenya, Societies
    Regulatory Authority and Insurance Regulatory
    Authority are due for a meeting to discuss who
    they can regulate virtual currencies.
  • Another initiative was taken in the private
    sector of Kenya it launched TMT Global Coin, a
    logistics company powered by blockchain that
    believes in improving cargo logistics globally by
    utilizing blockchain technology via smart
    contracts to enhance the authenticity and
    transparency of records in exports and imports.

  • Nigeria is counted amongst the largest economies
    of Africa. Many times, Nigeria has warned the
    citizens, as well as the local banks, regarded
    doing business with Crypto exchanges.
    Nonetheless, with the economy embracing stability
    over the past couple of months in 2018, the head
    of Bank, Musa Jimoh, revealed has started looking
    into these virtual currencies from a policy point
    of view.
  • Despite such warnings, a Ponzi scheme related to
    Bitcoin resulted in around 12 million residents
    of Nigeria who lost a combined 50 million in
    early 2017.
  • Furthermore, the Nigerian Deposit Insurance
    Corporation also warned the citizens of Nigeria
    they would not be afforded protection for
    customers or insurance from the NDIC when buying
    and selling in cryptocurrencies since the Central
    Bank of Nigeria has not issued virtual
    currencies. In addition to this, NDIC also stated
    that none of the central banks will accept
    digital currency as an alternative for its
    national currency when it is not capable of
    controlling it.
  • Despite the above responses by The Central Bank
    of Nigeria and the NDIC, Nigeria keeps the
    worlds third-largest holdings for Bitcoin as
    the percentage of gross domestic product.

  • Mauritius issued an open call to trendsetters to
    take benefit of its new Regulatory Sandbox
    License in May 2017. But it was required that
    applicants should ensure their project is
    innovative, advantageous to the economy of
    Mauritius, and cannot be accommodated in the home
    jurisdiction of trendsetter due to regulatory or
    legal gaps. The government of Mauritius is
    specifically looking for some impressive fintech
    startups and strives to be recognized as Ethereum
  • In February 2018, the Innovation-Driven Financial
    Services Regulatory Committee and the Fintech met
    to make recommendations to Mauritius government
    on the requirement to launch new sets of
    regulations for innovation and fintech.
  • However, there has been no such lawsuit or court
    action reported in Mauritius yet.

Cryptocurrency Taxation Outlook
  • A draft, named TLAB (Taxation Laws Amendment
    Bill) has been issued and suggests several
    amendments to the Income Tax Act (1962) and the
    VAT Act 89 (1991), which looks for clarifying the
    current provisions that are dealing with crypto
    assets in the South African tax regulation.
  • Under the Value Added Tax Act 89 of 1991, it is
    suggested to amend section 2 to be added in the
    definition of financial services, the collection,
    acquisition, issue, trading, or transfer of
    ownership of any digital or crypto asset.
    Consequently, if the suggestion concerning the
    Value Added Tax Act is accepted, all dealings
    related to crypto-assets will be supposed to be
    exempt from VAT in terms of the VAT Acts section
  • Under the Income Tax Act 58 of 1962, it is
    suggested that crypto-assets be added in the
    description of the Financial Instrument.
    Nonetheless, it is also suggested to amend the
    Income Tax Acts section 20A, to add the
    acquisition of any crypto assets beneath the
    ring-fencing of accessed loss provisions. If this
    suggested is permitted, dealers of crypto assets
    will be able to offset the losses incurred from
    dealing in crypto assets from other trades.

Cryptocurrency Taxation Outlook
  • The attention behind these suggested amendments
    to the tax regulation is to clear out the tax
    treatment of crypto assets under the tax
    regulations. From the perspective of an income
    tax, crypto-assets should be treated as
    financial instruments for income tax, and from
    the perspective of Value Added Tax, the
    collection, issue, trading, acquisition, and
    transfer of crypto assets ownership should be
    treated as a financial service.

Final Thoughts
  • Interest in Cryptocurrency is progressively
    growing in Africa. According to some economists,
    it is a disruptive innovation that will blossom
    on Africa. Every country in the continent has a
    different approach towards regulation
    cryptocurrencies or Cryptocurrency exchanges or
    Bitcoin trading. If you are planning to establish
    a white label crypto exchange software
    development company or white label crypto
    exchange, you need to have a look at the
    Cryptocurrency compliance that this continent has
    to offer. Furthermore, the taxation outlook for
    Cryptocurrency is also very important to be
    understood especially if you are planning to
    get white label bitcoin exchange software.

Thank You
Espay Exchange
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