In an update shared over the country's news agency, the South African Revenue Service (SARS) has called taxpayers to declare their digital currencies and other crypto assets through its Voluntary Disclosure Program (VDP).
Given the increasing popularity of digital assets like Bitcoin and Ripple's XRP among South Africans, the agency's latest move isn't surprising. Also, many have expected the tax policy following the Financial Sector Conduct Authority's decision to declare crypto as a financial instrument.
Crypto Assets And Transactions Growing In Scale
Like other countries, South Africa is experiencing massive growth in crypto-related transactions. One media poll suggests that around 40% of the country's population has used Ripple and other digital currencies for online payments. According to SARS' internal data, around 5.8 million locals hold cryptos and engage in a considerable chunk of Bitcoin transactions.
Media Release: SARS Warns About Crypto Asset Compliance
SARS has noted the phenomenal growth of the use of various digital currencies by many South Africans. Prominent amongst these is the prevalence of crypto assets… https://t.co/EXlWYlYrVA pic.twitter.com/fDbggUzSA1
— SA Revenue Service (@sarstax) October 9, 2024
SARS Sees Risks Ahead, Calls For Voluntary Disclosure Of Crypto Assets
Still, the local acceptance and growing popularity have some hazards. The national tax department alerts of intentional tax avoidance. Many residents reportedly fail to disclose their crypto assets when submitting tax forms.
SARS is thus looking over its Voluntary Disclosure Program in order to promote openness on bitcoin ownership. The agency urged traders and holders to disclose all their income assets—including digital currencies—in a notice dated October 9. The agency also said that it has gotten in touch with exchanges to assist with information disclosure on crypto transactions.
Other third parties are also expected to cooperate with SARS in its drive to promote compliance. For example, it's working with the Financial Sector Conduct Authority (FSCA) to provide information on digital currency service providers. Furthermore, local and international exchanges are also working with the agency to improve information dissemination and compliance.
Filing Of Crypto Assets Simplified, But Warns On Non-Compliance
SARS promises a convenient and stress-free way to declare digital assets. Filing will be simplified, increasing the number of audit teams to sort applications. The agency also shares that it's leveraging machine learning and generative AI to promote compliance. Edward Kieswetter, SARS Commissioner, also called for help and compliance.
However, the taxpayers' non-compliance with this new policy comes at a cost. According to Kieswetter, the agency will pursue those who deliberately ignore the new rule. SARS isn't the only one promoting transparency in crypto asset ownership. The FSCA has also pursued individuals and firms that failed to report their transactions.
Featured image from News24, chart from TradingView
