South Africa To Crack Down on Crypto Tax Evasion in the Country

The South African Revenue Service (SARS) is the government agency in charge of collecting taxes and enforcing tax laws in the country, even for crypto traders. The tax authority highlighted that many South Africans need to declare their digital assets and trades when submitting tax returns. 

As millions of South Africans dive into digital assets, SARS is tightening its grip on crypto holders and traders who fail to declare their earnings. 

South Africa’s Crypto Boom and The Tax Concerns

On October 9th, the tax authority issued a reminder to taxpayers. It stated that South African law requires all income, including digital assets, to be declared under the SARS Voluntary Disclosure Programme (VDP).

To enforce compliance, SARS revealed its collaboration with crypto exchanges and involved key players like the Financial Sector Conduct Authority (FSCA). The goal is to gather user information and ensure crypto traders and holders meet their tax obligations. 

Soon, digital currencies will be fully integrated into South Africa’s tax compliance framework. 

Global Efforts and Technological Advancements

In addition to local measures, SARS is stepping up its international efforts. The agency disclosed that it is in talks with other tax authorities worldwide. This effort is to strengthen agreements on offshore crypto accounts South Africans hold. 

The agency is awaiting the Minister of Finance’s approval of these agreements by November. SARS said it is developing AI-powered systems to track crypto activity better and enforce compliance. 

In addition, the machine learning algorithms that will help identify potential non-compliance crypto users are in the process. SARS also sends query letters to crypto investors seeking further details about their digital asset portfolios.

FSCA’s Regulatory Push

Of these, 63 have been approved, while five were denied due to non-compliance with regulatory standards. The FSCA is investigating 30 cases of illegal crypto activities in South Africa.