The South African Revenue Service calls on citizens to declare their crypto assets, stressing the importance of compliance with tax laws.

South Africa’s Crypto Boom and Tax Concerns

With 5.8 million South Africans holding cryptocurrencies, the nation has become a global leader in Bitcoin adoption. However, SARS is increasingly concerned that many citizens are not declaring their digital assets. On October 9th, a notice was issued regarding the need to declare all income, including cryptocurrencies, under the SARS Voluntary Disclosure Programme (VDP). To enforce compliance, SARS is collaborating with crypto exchanges and key players like the FSCA to gather user information and monitor their tax obligations.

Global Efforts and Technological Advancements

In addition to local measures, SARS is intensifying its international efforts, engaging with other tax authorities to strengthen agreements on offshore crypto accounts. The Minister of Finance's approval of these agreements is expected by November. SARS is developing AI systems to track crypto activity more accurately and identify potential non-compliance. Furthermore, investors are being queried for more details about their digital asset portfolios.

FSCA’s Regulatory Push

The financial watchdog FSCA has been actively regulating the crypto industry since it declared crypto assets as financial products in 2022. In June 2023, the FSCA started issuing licenses to crypto service providers. Of the 383 applications submitted, 63 have been approved and 5 denied for non-compliance with standards. The FSCA is investigating 30 cases of illegal crypto activities as it seeks to bring more order and safety to the fast-growing crypto market.

The stance of South African tax authorities and regulators increases focus on crypto assets, integrating them into the existing legal and tax framework for compliance.