SA TAX AUTHORITY TARGETS TAX-DODGING HOLDERS OF CRYPTO ASSETS

Fri 11 October 2024:

The South African Revenue Service (SARS), the country’s tax authority, has issued a stern warning on Wednesday to taxpayers who hold digital currencies, urging them to declare crypto assets on tax returns.

According to the SARS, more than 5.8 million South Africans hold crypto assets, yet many have not declared them in their tax filings.

The tax authority said it is engaging with the country’s Financial Sector Conduct Authority to obtain information on registered crypto asset service providers while receiving information directly from the local exchanges.

“Those who are evading their responsibility make the burden of compliance difficult for other taxpayers. This is not only unfair to honest taxpayers but also affects the vulnerable in society disproportionately by limiting the state’s ability to deliver social grants and other much-needed social benefits,” said SARS Commissioner Edward Kieswetter.

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Kieswetter said the SARS is exchanging information with other tax authorities globally through multilateral agreements.

The provision of offshore crypto accounts will be the subject of a multilateral agreement to be signed by ministers of finance in November, which is expected to catalyze the cross-jurisdictional exchange of such information in respect of South African taxpayers, said the SARS in a statement.

The SARS is asking people to willingly declare their crypto assets, promising to “make it hard and costly for those who are willfully non-compliant.”

“Let all know that technology has enhanced SARS’ ability to root out non-compliant taxpayers, and the SARS will pursue all without fear, favor or prejudice,” said Kieswetter.

The SARS said it is increasing the capability of its audit teams to support enforcement initiatives in addressing crypto compliance, adding that it has increased the use of artificial intelligence, machine learning, and algorithms to process its work.

The SARS recently sent query letters to taxpayers with crypto assets to gain insights into their investments and trading activities and thus assess their compliance in this regard.

-Xinhua

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