In an update shared via the national news agency, the South African Revenue Service (SARS) has urged taxpayers to declare their digital currencies and other crypto assets under the Voluntary Disclosure Program (VDP).
Given the growing popularity of digital assets such as Bitcoin and Ripple’s XRP among South Africans, the agency’s latest move is not surprising. Additionally, many expected tax policy following the Financial Sector Conduct Authority’s announcement decision cryptocurrency as a financial instrument.
Crypto assets and transactions are growing in scale
Like other countries, South Africa is experiencing a huge escalate in cryptocurrency transactions. One media survey suggests that about 40% of the country’s population uses Ripple and other digital currencies for online payments. According to internal SARS data, approximately 5.8 million residents own cryptocurrencies and engage in a significant proportion of Bitcoin transactions.
Press Release: SARS warns about compliance with crypto assets regulations
SARS has seen a phenomenal escalate in the employ of various digital currencies by many South Africans. Among them, the universality of crypto assets stands out… https://t.co/EXlWYlYrVA pic.twitter.com/fDbggUzSA1
— SA Tax Office (@sarstax) October 9, 2024
SARS sees risks coming and calls for voluntary disclosure of crypto assets
However, local acceptance and growing popularity carry some risks. The national tax office warns about deliberate tax avoidance. Many residents reportedly do not disclose their information crypto assets when submitting tax forms.
SARS is therefore looking at its voluntary disclosure program to promote openness in bitcoin ownership. The agency urged traders and holders to do so disclose all your earning assets– including digital currencies – in the October 9 notice. The agency also said it had contacted exchanges to aid disclose information about cryptocurrency transactions.
Other third parties are also expected to cooperate with SARS in its efforts to promote compliance. For example, it works with the Financial Sector Conduct Authority (FSCA) to provide information on digital currency service providers. In addition, local and international agencies also work with the agency to improve information dissemination and ensure regulatory compliance.
Simplifying the archiving of crypto assets, but warns in case of non-compliance
SARS provides a convenient and stress-free way to declare digital assets. Submitting applications will be simplified, which will escalate the number of audit teams dealing with the sorting of applications. The agency also says it uses machine learning and generative artificial intelligence to promote compliance. Edward Kieswetter, the SARS commissioner, also called for aid and compliance.
However, taxpayers’ failure to comply with this fresh policy comes at a cost. According to Kieswetter, the agency will pursue those who willfully ignore the fresh rule. SARS is not the only company promoting transparency in cryptocurrency ownership. The FSCA also pursued individuals and companies that failed to report their transactions.
Featured image from News24, chart from TradingView