In an update shared via the country’s news agency, the South African Revenue Service (SARS) has called on taxpayers to declare their digital currencies and other crypto assets through 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. Many also expected the tax policy after the Financial Sector Conduct Authority’s decision to announce it Cryptocurrency as a financial instrument.
Crypto assets and transactions are growing widely
Like other countries, South Africa It is experiencing tremendous growth in crypto-related transactions. One media poll indicates that about 40% of the country’s population has used Ripple and other digital currencies for online payments. According to internal SARS data, about 5.8 million local residents own cryptocurrencies and participate in a significant portion of Bitcoin transactions.
Media Release: SARS Warns on Crypto Assets Compliance
SARS observed the tremendous growth in the use of various digital currencies by many South African citizens. One of the most prominent of these matters is the spread of crypto-assets… https://t.co/EXlWYlYrVA pic.twitter.com/fDbggUzSA1
— SA Revenue Service (@sarstax) October 9, 2024
SARS sees the risks ahead, and calls for voluntary disclosure of crypto assets
However, local acceptance and growing popularity come with some risks. The National Tax Administration alerts you to intentional tax evasion. Many residents reportedly failed to reveal their identities Crypto assets When submitting tax forms.
SARS is therefore looking into its own voluntary disclosure program in order to promote openness to Bitcoin ownership. The agency urged traders and stockholders to do so Disclose all their income assets– including digital currencies – in a notice dated October 9. The agency also said it has reached out to exchanges to help disclose information related to cryptocurrency transactions.
Other third parties are also expected to cooperate with SARS as it seeks to enhance compliance. For example, it works with the Financial Sector Conduct Authority (FSCA) to provide information about cryptocurrency service providers. Furthermore, domestic and international exchanges are also working with the agency to improve information dissemination and compliance.
Simplifies the process of depositing crypto assets, but warns of non-compliance
SARS promises a convenient and stress-free way to advertise digital assets. The application process will be streamlined, increasing the number of screening teams to sort through applications. The agency also shares that it is leveraging machine learning and generative artificial intelligence to enhance compliance. Edward Kieswetter, SARS commissioner, also called for assistance and compliance.
However, taxpayer non-compliance with this new policy comes at a cost. According to Kieswetter, the agency will pursue those who intentionally ignore the new rule. SARS is not the only one promoting transparency in the ownership of crypto assets. The Financial Conduct Authority (FSCA) also pursued individuals and companies who failed to report their transactions.
Featured image from News24, chart from TradingView