SARS has raised alarms over taxpayers failing to declare crypto assets and transactions, sparking a move to intensify its monitoring efforts to ensure full compliance.
In a statement issued on Wednesday, the South African Revenue Service (SARS) pointed to a sharp rise in the use of various digital currencies, particularly crypto assets, as a significant concern. “A staggering number of more than 5.8 million South Africans hold a crypto asset, with Southern Africa boasting the largest uptake of bitcoin in the world,” the revenue service noted.
SARS expressed its concern that these crypto assets and related transactions were not being properly declared in taxpayers’ returns. The agency reminded citizens that it has a legal obligation to account for all income or assets held by taxpayers. Previously, SARS had invited crypto exchanges, traders, and holders of digital assets to voluntarily disclose their activities. However, with many failing to comply, the agency is now stepping up its efforts.
“SARS will be including crypto assets in its compliance programmes,” the statement said. The agency revealed that it is collaborating with the Financial Sector Conduct Authority (FSCA) to obtain more information on registered crypto service providers. “SARS is also receiving information directly from the local exchanges,” the tax authority added.
SARS further explained that through its multilateral agreements with tax authorities worldwide, it is now able to exchange information globally. Offshore crypto accounts will be covered under a multilateral agreement that the finance minister is expected to sign in November, which will enable cross-jurisdictional sharing of information on South African taxpayers holding digital assets.
In a related development, Pick ‘n Pay recently reported that it has processed R1 million a month in sales since it introduced Bitcoin payments at its tills across the country. The popular retailer allows customers to purchase groceries, airtime, and data, and even pay municipal bills using digital currency. Notably, half of all transactions fall under R500, with a cap set at R10,000.
SARS has already taken action by issuing query letters to taxpayers suspected of holding or trading crypto assets, seeking further information on their investments and activities. This is part of the agency’s broader effort to assess the level of taxpayer compliance in this rapidly evolving space.
In an attempt to encourage taxpayers to come forward, SARS reminded individuals of its Voluntary Disclosure Programme (VDP), which provides an avenue to rectify non-compliance under strict conditions. “Taxpayers who could potentially be affected and are understandably concerned about their crypto asset compliance are reminded of the SARS voluntary disclosure programme (VDP) to facilitate compliance. This opportunity has strict conditions, one being that taxpayers must approach SARS first. Once SARS has identified the taxpayer for audit, they are precluded from applying for the VDP,” the agency said.
SARS emphasized that while it is committed to making compliance as easy as possible for taxpayers, it will not hesitate to make the process “hard and costly” for those who intentionally fail to meet their obligations.
The revenue authority has also bolstered its audit teams’ capabilities to address the complexities of crypto compliance, leveraging artificial intelligence, machine learning, and advanced algorithms to process large volumes of data. SARS Commissioner Edward Kieswetter underscored the enhanced enforcement efforts, warning: “Be warned, SARS will pursue all without fear, favour, or prejudice.”
As the use of digital currencies continues to expand in South Africa, the tax authority’s message is clear: non-compliance will not go unnoticed, and those attempting to evade taxes on crypto assets will face significant consequences.
