Cryptocurrency is on the rise in South Africa, with nearly 6 million citizens now owning digital assets. However, the South African Revenue Service (SARS) has issued a stern warning to taxpayers: if you own crypto, you must declare it in your tax return—or face serious consequences.
SARS cracks down on crypto non-compliance
SARS has expressed growing concern over the lack of compliance among crypto investors. Despite the rapid adoption of digital currencies, many South Africans have failed to include their crypto holdings in their tax returns.
Here’s what you need to know about SARS’ efforts to enforce compliance:
Enhanced Monitoring
SARS has partnered with the Financial Sector Conduct Authority (FSCA) to obtain data from registered crypto asset service providers (CASPs) and local exchanges.
Global Cooperation
Through international agreements, SARS exchanges information with global tax authorities. A new multilateral agreement will enable cross-border sharing of data on offshore crypto accounts.
SARS is leveraging advanced technologies, such as artificial intelligence and machine learning, to identify taxpayers who fail to declare their crypto income.
SARS Commissioner’s warning
SARS Commissioner Edward Kieswetter didn’t mince words:
Tax evaders increase the burden on compliant taxpayers.
SARS will use every tool at its disposal, including expanded audit teams and data analytics, to ensure compliance.
The agency is already issuing query letters to taxpayers identified as crypto holders.
“Be warned, SARS will pursue all without fear, favour, or prejudice,” Kieswetter cautioned.
Voluntary disclosure: Your chance to avoid penalties
SARS encourages taxpayers to make use of the Voluntary Disclosure Programme (VDP) to declare previously undeclared crypto income. The benefits of using the VDP include reduced penalties and avoiding potential legal consequences.
However, once you are flagged for an audit, you are no longer eligible for the VDP. Taxpayers should act quickly to rectify any discrepancies and ensure their crypto-related income is declared in full.
What this means for crypto investors
If you own cryptocurrency, here are the key steps to ensure compliance:
Declare all crypto holdings and related income on your tax return.
Keep accurate records of transactions, including purchases, sales, and transfers.
If you have undeclared crypto income, take advantage of the VDP before it’s too late.
MMS Group: Your partner in tax compliance
MMS Group is here to assist our clients in navigating the complexities of crypto taxation. Our team of tax experts ensures your crypto holdings are declared accurately and in compliance with SARS’ requirements.
If you require assistance with your income tax compliance, reach out to a member of our income tax team.