The South African Revenue Service (SARS) has recently made a significant announcement regarding the inclusion of crypto assets in its tax compliance programs. This move comes in response to the increasing number of taxpayers failing to declare their crypto assets and trades in their tax returns. SARS is now seeking information on crypto users from the Financial Sector Conduct Authority (FSCA) and crypto asset service providers to streamline the process of compliance.
According to South African law, SARS is mandated to account for all income and assets, including cryptocurrency. This understanding has prompted the revenue collector to initially request voluntary declarations from entities dealing with crypto. However, in light of the lack of compliance, SARS is now focusing on simplifying the compliance process for taxpayers and traders while emphasizing the severe consequences of willful tax evasion.
To enhance its efforts in identifying and auditing non-compliant taxpayers, SARS has bolstered its audit teams and embraced the use of advanced technologies such as artificial intelligence, machine learning, and algorithms. The revenue collector has also started issuing query letters to taxpayers with crypto assets to gain insight into their investments and trades in crypto assets, enabling SARS to assess their compliance accurately.
In addition, SARS has urged South African taxpayers who are concerned about compliance to participate in the Voluntary Disclosure Program (VDP) to rectify any non-compliance issues. However, taxpayers who are already under audit will not be eligible for the VDP. SARS Commissioner Edward Kieswetter emphasized the revenue collector’s commitment to pursuing all non-compliant taxpayers without fear, favor, or prejudice.
Overall, SARS’ decision to include crypto assets in its tax compliance programs reflects its dedication to ensuring that all taxpayers adhere to the law and declare their assets accurately. By leveraging technology and implementing robust audit processes, SARS aims to streamline the compliance process and hold non-compliant taxpayers accountable for their actions.