Crypto Tax Evasion: SARS Crackdown And How To Stay Compliant
- SARS intensifies cryptocurrency enforcement, targeting undeclared assets held by over 5.8 million South Africans.
- New international agreements will boost cross-border data sharing on crypto assets, aiding SARS in offshore monitoring.
- SARS uses AI and machine learning to detect crypto tax evasion, urging taxpayers to comply through its Voluntary Disclosure Programme.
The South African Revenue Service (SARS) is stepping up its enforcement in the cryptocurrency sector, given that over 5.8 million South Africans own digital assets. Bitcoin usage is at its highest in Southern Africa and this has put SARS in a quandary as to whether taxpayers are declaring their digital assets assets and trading on their tax returns.
According to a recent report, SARS has made great steps in this regard by incorporating the use of crypto assets in its tax compliance measures. The agency has partnered with the Financial Sector Conduct Authority (FSCA) to obtain information on CASPs that are registered in the Country. Also, on a recent prospect, SARS has started getting information from the local exchanges to track undisclosed Crypto assets and transaction.
Offshore Crypto Monitoring
This is not only limited to South African exchanges. SARS is using the international cooperation to strengthen its supervisory activities. Due to international cooperation with other tax authorities, the revenue service has recently got information about the cryptocurrency accounts in the offshore zone, belonging to the residents of South Africa. A new framework, expected to be inaugurated in November 2024 by the Finance Ministers of the world, will enhance the sharing of information on cross-border digital assets related data.
However, SARS recognizes that the large number of taxpayers and traders want to meet their legal responsibilities and for this reason, the agency is determined to ensure that it is easy for people to meet those obligations. To this end, the SARS has adopted the use of technology such as the artificial intelligence, machine learning and algorithms in its efforts towards enhanced non-compliance detection.
In the recent past, SARS has been sending letters to taxpayers that invest in digital assets to get them to disclose their investments and trading activities. This is part of a wider check to determine levels of compliance and to find those who are yet to report crypto investments. Non-Compliance Warning
SARS Commissioner Edward Kieswetter has said that non-compliance to tax laws is not fair to hard working citizens as it limits the governments ability to provide social services such as social grants. He stated:
This is not only unfair to honest taxpayers but affects the vulnerable in society disproportionately by limiting the states ability to deliver social grants and other much needed social benefits.
For those worried about their crypto tax liabilities, SARS is promoting the VDP or Voluntary Disclosure Programme. The VDP lets taxpayers report the crypto assets before they are chosen for an audit. However, once a taxpayer has been identified as having been chosen for an audit, they are not able to apply for the program.
Read more: https://www.tronweekly.com/crypto-tax-evasion-sars-crackdown-and-how-to/
Text source: TronWeekly
