Here in my country which is now an upcoming tiger economy (though we are still classified as a third-world country), we are free to participate in Bitcoin both buying and selling as the government is treating Bitcoin just like any other foreiign money.
However, I am sure that only a very, very small fraction of us are declaring our Bitcoin income. It seems to me that the government is not that interested to get strict with individuals as long as they can tax the Bitcoin exchange provider for the service rendered.
I am then wondering the situation with other countries. Can your government really be able to track if you never declared gains made from Bitcoin transactions?
I dont know if we both belong in the same country but i guess it is. Actually though the government doesnt collect taxes from the bitcoin itself but as soon as we converted it into fiat then there goes the tax. That is the reason why we paid for the transactions that we had, either through money remottance or through the bank accounts.