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?
Well here in my country Bitcoin and crypto currency are not accepted as a means payment for goods and services and that has made government not to tax even the local exchanger let alone individuals that are involved in the crypto currency business activities which is one of the benefits we stand to enjoy at the moment pending when the government will realise that they are making a big mistake.