The South African Revenue Service (SARS) has recently urged taxpayers to declare their cryptocurrency holdings as part of its Voluntary Disclosure Programme (VDP). This move comes in light of the increasing popularity of digital currencies like Bitcoin and Ripple’s XRP among South Africans.
With the rise in crypto transactions, SARS’ announcement was anticipated, especially after the Financial Sector Conduct Authority (FSCA) classified cryptocurrencies as financial instruments.
A recent survey indicates that about 40% of South Africans have engaged with cryptocurrencies for online payments, and approximately 5.8 million individuals in the country own some form of digital currency.
Despite the growing acceptance of cryptocurrencies, SARS has raised concerns about tax evasion, noting that some taxpayers are not reporting their crypto assets.
To combat this, the agency is stressing the importance of transparency and encouraging citizens to declare all their assets, including digital currencies. In a statement made on October 9, SARS called on traders and crypto enthusiasts to be open about their holdings.
To facilitate this process, SARS is working with crypto exchanges to collect transaction data and is collaborating with organizations like the FSCA to enhance compliance. Both local and international exchanges are on board to help improve transparency.
SARS has committed to simplifying the reporting process for crypto assets, making it easier for taxpayers to comply with the new regulations. The agency is also ramping up its audit teams and leveraging machine learning and artificial intelligence to ensure adherence to the rules. Commissioner Edward Kieswetter has encouraged citizens to embrace these changes.
However, SARS has made it clear that failing to comply with the new tax regulations will lead to repercussions. Kieswetter highlighted that the agency will take action against those who choose to ignore these requirements.
