SARS Targets Cryptocurrency in Tax Compliance Efforts
The South African Revenue Service (SARS) has announced its intention to incorporate cryptocurrency assets into its broader tax compliance programs. In a bid to ensure that crypto users adhere to tax regulations, SARS has begun gathering information on individuals and entities involved in the trading of digital assets. The agency is ramping up efforts to identify and audit non-compliant taxpayers who fail to declare cryptocurrency holdings and trades in their tax returns.
SARS has also advised taxpayers who may be concerned about their compliance status to participate in the Voluntary Disclosure Program (VDP). However, the revenue collector clarified that those already under audit will not be eligible for the program.
Focus on Streamlining Crypto Tax Compliance
SARS revealed its focus on crypto assets during a statement on October 9, highlighting concerns that many taxpayers have not been declaring their cryptocurrency dealings. Under South African law, all forms of income, including from crypto, must be reported. This legal requirement prompted SARS to initially request voluntary declarations from those involved in the crypto sector.
In its latest update, the revenue agency reaffirmed its dedication to streamlining tax compliance for crypto traders. Alongside this, SARS emphasized the serious consequences of willful tax evasion. To bolster its efforts, the agency has strengthened its audit teams and turned to cutting-edge technologies to better track and assess taxpayers’ activities in the cryptocurrency market.
"In order to process our job, SARS has turned to using more artificial intelligence, machine learning, and algorithms," the agency stated.. It also confirmed that query letters have been sent to taxpayers who are suspected of holding crypto assets. These inquiries aim to clarify the extent of these individuals' involvement in crypto investments and trading, ultimately helping SARS evaluate their tax compliance.
Warning to Non-Compliant Crypto Traders
SARS has issued a stern warning to South African taxpayers who may be falling short of compliance. Those worried about their standing are being urged to take advantage of the Voluntary Disclosure Program to avoid facing penalties later. However, for those already under audit, this program will not be an option.
SARS Commissioner Edward Kieswetter underscored the advancements in technology that have enabled the agency to more efficiently identify non-compliant individuals. "SARS will pursue all without fear, favor, or prejudice," Kieswetter stated, signaling the agency’s firm stance on enforcing tax compliance, particularly in the growing crypto market.
As cryptocurrency adoption continues to rise in South Africa, the government’s scrutiny of digital assets is set to increase, with further measures likely to follow to ensure the sector’s full integration into the nation’s tax system.
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