- The South African Revenue Service (SARS) is reportedly intensifying its focus on crypto traders.
- According to law firm Webber Wentzel, traders have begun to receive notices that their tax affairs are under review.
- Failure to provide requested information to SARS could be deemed a criminal offence.
The rest of 2024 could shape up to be an interesting time as regards cryptocurrency in South Africa. This as the South African Revenue Service (SARS) is reportedly intensifying its focus when it comes to crypto traders operating locally.
Per a release shared with Hypertext by law firm Webber Wentzel, crypto traders in SA have begun receiving notices from SARS that their tax affairs are officially under review.
“These notifications are based on information obtained from various crypto asset exchanges, signalling a significant escalation in SARS’s efforts to enforce tax compliance within the burgeoning crypto sector,” a release co-authored by Cor Kraamwinkel, partner, Lenee Green, partner, Lerato Lamola, partner, Margaret Vermaak, senior associate, and Mieke Vlok, senior associate at Webber Wentzel.
“Following South Africa’s move to regulate financial service providers who provide financial services related to crypto assets, licensed crypto-asset exchanges are now required to provide certain information to regulators,” they add.
Further unpacking the evolving situation, the law firm says SARS has cautioned crypto traders that failure to provide requested information could be deemed a criminal offence under the Tax Administration Act.
“This move underscores the tax authority’s ‘leave no stone unturned’ policy in its pursuit of revenue collection by any means necessary and taxable profits from crypto trading are no exception,” Webber Wentzel explained.
Interestingly, the law firm also notes that SARS appears to be leveraging artificial intelligence (AI) technology in order to assist with the recent crackdown.
“However, the full extent of AI’s implementation in identifying non-compliant crypto traders remains uncertain. This innovative approach reflects SARS’ commitment to modernising its enforcement mechanisms to address the complexities of digital asset trading,” the firm continued.
“The increased scrutiny from SARS, coupled with the regulatory stance of SARB, signals a new era of accountability and transparency for crypto traders in South Africa. Those engaged in crypto trading must now navigate a more complex regulatory landscape, ensuring they remain compliant to avoid severe penalties and legal repercussions. The era of flying under the radar is swiftly coming to an end, and traders must adapt to these regulatory changes to safeguard their financial interests,” it concluded.
How local crypto exchanges and the general cryptocurrency landscape will react to this news remains to be seen, especially as we have seen some increased stability, particularly from well known coins.
