South African tax authorities have started requesting user data from crypto exchanges
To avoid consequences, the agency encouraged taxpayers to participate in a voluntary disclosure program
14.10.2024 - 11:25
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What’s new? The South African Revenue Service (SARS) has announced plans to include crypto assets in its compliance programs. Already, SARS has begun seeking information on crypto users and ramping up efforts to identify and audit non-compliant taxpayers.
What else is known? Taxpayers have been encouraged to participate in a voluntary disclosure program. At the same time, the proposal is not valid for those in whose respect an audit has already been initiated. Officials recalled the consequences of willful tax evasion and stated their intention to pursue all non-compliant taxpayers.
SARS is currently requesting information on crypto users from the Financial Sector Conduct Authority (FSCA) and digital asset service providers.
SARS attributed its move to the fact that taxpayers do not declare crypto assets and transactions on their returns, while the agency itself is required by law to report all income and assets, including cryptocurrency.
Officials are now working to simplify compliance for taxpayers and traders, and at the same time strengthen their audit teams using the latest technologies such as machine learning and artificial intelligence to process data.
Last July, the FSCA introduced mandatory licensing for crypto exchanges operating in the local market. Since November 30, a fine of 10 million South African rand, or about $573 000, has been imposed for violating the rule, with penalties of up to 10 years in prison for platform managers.
By April this year, 60 crypto trading platforms had received licenses.
In general, the FSCA, which is responsible for crypto regulation, has not developed a separate regulatory framework for crypto exchanges; they are supervised under the current Financial Advisory and Intermediary Services (FAIS) Act.
Earlier, the UAE tax authority exempted cryptocurrency transfer and conversion operations from VAT, while the Turkish authorities refused to introduce a tax on crypto trading from 2025.
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