SARS issues warning to crypto holders and traders to declare crypto assets on tax returns

The South African Revenue Service (SARS) has issued a warning to crypto holders and traders to declare crypto assets on tax returns.

South Africa's tax authority, the South African Revenue Service (SARS), has warned crypto holders and traders to declare their crypto assets on their tax returns.

SARS is increasing compliance in the sector as more than 5.8 million South Africans are said to own digital currencies.

SARS has partnered with the Financial Sector Conduct Authority to ensure transparency and is gathering data from local exchanges.

This comes after reports that SARS has started sending notices to crypto traders, requesting information on digital assets, including historical records, which could result in tax liabilities for previously undeclared assets.

Licensed exchanges like Luno and VALR have stated that they do not typically share customer data but will comply with legal requirements if SARS requests information for specific investigations.

SARS Commissioner Edward Kieswetter emphasized the agency's goal to improve compliance, highlighting that those who evade taxes place an unfair burden on honest taxpayers and limit the government's ability to fund essential social programs.

He warned, “SARS will pursue all without fear, favor, or prejudice.”

However, Wiehann Olivier, partner and head of fintech and digital assets at Forvis Mazars, believes that SARS' heavy-handed approach may not be optimal.

He stated that the agency could better promote compliance through clear guidance, as "you can catch more flies with honey than with vinegar.”