In a recent update from the nation’s news agency, the South African Revenue Service (SARS) has urged taxpayers to declare their digital currencies and various crypto assets through its Voluntary Disclosure Programme (VDP).
With the rising popularity of digital assets like Bitcoin and Ripple’s XRP among South Africans, the agency’s new initiative comes as no surprise. Moreover, many anticipated the tax guidelines following the Financial Sector Conduct Authority’s decision to classify crypto as a financial instrument.
Expansion of Crypto Assets and Transactions
Like many other nations, South Africa is witnessing substantial growth in crypto-related transactions. A media poll indicates that about 40% of the country’s population has utilized Ripple and other digital currencies for online purchases. SARS’ internal statistics show that roughly 5.8 million citizens hold cryptocurrencies and are involved in a significant amount of Bitcoin dealings.
Media Release: SARS Warns About Compliance with Crypto Assets
SARS has observed the remarkable rise in the use of various digital currencies by many South Africans. Prominent among these is the widespread use of crypto assets… https://t.co/EXlWYlYrVA pic.twitter.com/fDbggUzSA1
— SA Revenue Service (@sarstax) October 9, 2024
SARS Warns of Potential Risks, Encourages Voluntary Disclosure of Crypto Holdings
However, the local acceptance and growing popularity also pose some risks. The national tax department is cautioning against intentional tax evasion. Reports suggest that many residents fail to declare their crypto holdings when filing tax returns.
Consequently, SARS is evaluating its Voluntary Disclosure Program to encourage transparency regarding Bitcoin ownership. The agency has urged traders and investors to disclose all their income assets—including digital currencies—in an announcement dated October 9. They also mentioned reaching out to exchanges to facilitate the disclosure of information related to crypto transactions.
Additional third parties are expected to assist SARS in promoting compliance as well. For instance, they are collaborating with the Financial Sector Conduct Authority (FSCA) to gather information on digital currency service providers. Furthermore, both local and international exchanges are also partnering with the agency to enhance information sharing and compliance efforts.
Simplified Filing for Crypto Assets, But Warning Against Non-Compliance
SARS has committed to a straightforward and efficient process for declaring digital assets. They are streamlining the filing process and increasing the number of audit teams to review applications. The agency also mentioned it is utilizing machine learning and generative AI to bolster compliance efforts. Edward Kieswetter, the SARS Commissioner, has called for cooperation and adherence to these new guidelines.
Nonetheless, taxpayers who fail to comply with this new policy will face consequences. According to Kieswetter, the agency will take action against those who deliberately disregard the new rules. SARS is not alone in advocating for transparency in crypto asset ownership; the FSCA is also targeting individuals and businesses that neglect to report their transactions.
Featured image from News24, chart from TradingView
