South African Revenue Service to Crack Down on Crypto Asset Non-Compliance
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The South African Revenue Service (SARS) has announced plans to enforce tax compliance on crypto assets, a move that signals the growing regulatory focus on digital currencies.
SARS noted the growing use of digital currencies, with over 5.8 million South Africans now holding crypto assets. As a result, the tax authority is concerned that many of these assets and trades are not being declared in tax returns.
To address this, SARS will be integrating crypto assets into its compliance programmes and collaborating with the Financial Sector Conduct Authority (FSCA) and local crypto exchanges to obtain relevant information.
SARS has also enhanced its international information-sharing capabilities through multilateral agreements, which will include offshore crypto accounts. A new agreement to be signed in November 2024 will facilitate cross-border tax compliance.
While SARS believes most taxpayers are honest, the agency is focusing on those who may be avoiding their legal obligations. Through the use of artificial intelligence and machine learning, SARS is ramping up its enforcement efforts and has already issued query letters to taxpayers involved in crypto assets.
Taxpayers concerned about their crypto compliance are encouraged to take advantage of SARS’ Voluntary Disclosure Programme (VDP), which allows them to declare their assets before being targeted for an audit. SARS Commissioner Edward Kieswetter emphasized the importance of compliance, warning that non-compliance will be met with strict enforcement measures.
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