SARS still on the hunt for crypto tax defaulters
The South African taxman has employed crypto tax specialists to help it firm up its tax collection strategy.
The South African Revenue Service (SARS) is ramping up efforts to recover five years’ worth of unpaid taxes from cryptocurrency holders.
SARS has established a specialized crypto unit dedicated to identifying and collecting outstanding tax liabilities in the sector.
The details
- According to reports, the recently formed special crypto unit at SARS has started issuing tax default notices to individuals who failed to disclose their taxable cryptocurrency holdings, targeting those who attempted to evade their obligations.
- Legal manager at Tax Consulting South Africa, Thomas Lobban said SARS’ crypto unit is auditing individual crypto activity from the past five years.
- The unit is working with exchanges to gather data on South African crypto holders and compare it with tax filings to identify payment gaps.
- To enhance its crypto oversight, Lobban stated that SARS’ crypto unit is recruiting specialists to conduct cryptocurrency audits.
Key quotes
- Lobban said:
“SARS has the authority to approach anyone and demand information about your tax matters, including from cryptocurrency platforms. The SARS team is highly knowledgeable about cryptocurrency, operates with sharpness, is diligently fulfilling its duties, and has ample resources to pursue its goals.”
Key context
- Many South Africans long believed crypto gains were exempt from SARS’ taxation, but the South African Reserve Bank (SARB) clarified last year that cryptocurrencies are subject to tax obligations.
- Around the same time, SARS began the process to identify defaulters and rein in collections.
- Profits on crypto trades in South Africa are subject to an 18% capital gains tax, while income from crypto mining activities and token airdrops attracts a 45% payment to SARS.
- Last September, Mariblock reported that SARS had started issuing tax notices to crypto holders while exploring AI-driven tools to improve tracking and enforcement.
- SARS requires individuals to self-declare their taxable earnings and is focusing enforcement efforts on those who fail to comply.
Zoom out
- South Africa is the most advanced country in Africa in terms of established crypto rules.
- It has issued 248 licenses to crypto firms in the country and continues to provide more clarity on the scope of the crypto regulations in the country.
