South Africa's tax authority issues warning on crypto asset compliance

The South African Revenue Service (SARS) has issued a warning about compliance with tax regulations for cryptocurrency holders. On October 9, 2024, SARS noted that over 5.8 million South Africans now hold crypto assets, making the region a leader in Bitcoin adoption. The agency is concerned that many taxpayers are not declaring these assets on their tax returns.

SARS is legally required to account for all income and assets and had previously invited voluntary disclosures from crypto users. To enhance compliance, it will include crypto assets in its programs and collaborate with the Financial Sector Conduct Authority (FSCA) to gather information on registered Crypto Asset Service Providers (CASPs).

Additionally, SARS is leveraging international agreements to share information with global tax authorities. A significant agreement on offshore crypto accounts will be signed by finance ministers in November 2024.

SARS has sent query letters to taxpayers with crypto assets to assess compliance and has enhanced its audit teams using advanced technologies. Commissioner Edward Kieswetter urged taxpayers to declare all income, warning that non-compliance affects honest taxpayers and limits social services.