The South African Revenue Service (SARS) is intensifying its efforts to clamp down on taxpayers who are profiting from crypto assets without declaring them. With more than 5.8 million South Africans reportedly holding crypto assets, the nation boasts one of the highest Bitcoin adoption rates globally, particularly in southern Africa.
SARS Commissioner Edward Kieswetter has expressed concern over the growing number of taxpayers who are failing to disclose their digital currency holdings and transactions on their tax returns. As digital currencies gain prominence, SARS is legally obligated to account for all income or assets held by South African taxpayers, including those from cryptocurrency dealings.
Kieswetter stated, “SARS is concerned that taxpayers are not declaring these crypto assets and trades on their tax returns.” In response, the revenue service had previously invited crypto exchanges and individuals involved in the crypto market to voluntarily disclose their holdings. However, recent developments indicate a more aggressive approach to enforcement.
FSCA to Share Crypto Trade Data with SARS
SARS has now incorporated crypto assets into its compliance programs and has begun working with the Financial Sector Conduct Authority (FSCA). This collaboration aims to gather information on registered Crypto Asset Service Providers (CASPs), ensuring that dealers in digital currencies comply with regulatory standards.
Crypto traders are required to register with the FSCA, and the agency is mandated to regulate their operations. In addition to receiving data directly from local exchanges, SARS also benefits from a global network of tax authority partnerships. This international collaboration, facilitated by multilateral agreements, allows SARS to access information on offshore crypto accounts.
Next month, finance ministers are expected to sign a pivotal agreement that will significantly enhance cross-border information exchange about South African taxpayers’ crypto holdings. This agreement will play a crucial role in SARS’ efforts to monitor compliance on a global scale.
Despite these measures, Kieswetter maintains that the majority of taxpayers and traders are compliant with their legal obligations. “Most taxpayers are honest, and we expect that they will assist in fulfilling their legal obligations,” he said.
Compliance or Consequences
While SARS emphasizes voluntary compliance, the agency is ramping up enforcement against those who fail to disclose their crypto dealings. “It is our strategic objective to make it hard and costly for those who are wilfully non-compliant,” said Kieswetter. This crackdown is aligned with SARS’ goal of fostering a culture of voluntary
