South African tax agency urges crypto holders to disclose assets

The South African Revenue Service (SARS) has introduced new tax regulations, encouraging cryptocurrency holders to declare their digital assets through its Voluntary Disclosure Programme (VDP).

This move comes after the Financial Sector Conduct Authority (FSCA) classified cryptocurrency as a financial instrument.

According to SARS, the increasing popularity of cryptocurrencies like Bitcoin (CRYPTO:BTC) and Ripple’s (CRYTPO:XRP) XRP has led to a surge in transactions in South Africa.

The agency reported that approximately 5.8 million South Africans own digital currencies and participate in Bitcoin-related activities.

SARS expressed concern over intentional tax evasion, noting that many taxpayers have failed to declare their cryptocurrency holdings in tax filings.

To promote transparency, SARS has started collaborating with both local and international cryptocurrency exchanges to ensure the accurate reporting of digital transactions.

The FSCA is also providing information on digital currency service providers to help improve tax compliance.

In a notice issued on October 9, SARS urged traders and investors to disclose all income, including digital currency assets.

The tax authority is simplifying the process for declaring digital assets and is ramping up its audit teams while utilising advanced technologies, such as machine learning and generative AI, to ensure proper compliance.

SARS Commissioner Edward Kieswetter emphasised the need for adherence to the new regulations, warning that non-compliance would lead to enforcement actions.