The South African Revenue Service intends to incorporate crypto assets into its tax compliance program

The South African tax authorities aim to incorporate digital asset exchanges and returns in its tax compliance program.

SARS is concerned about crypto holders and dealers evading taxes. South African taxpayers are not disclosing digital assets and transactions when completing returns, according to the tax office. The body also reduced penalties for digital asset tax violations.

SARS revealed that 5.8 million South Africans own crypto assets and that the nation has the biggest Bitcoin adoption. The tax collector was concerned that most South Africans do not disclose digital assets in their statutory SARS Voluntary Disclosure Programme (VDP) forms.

On October 9, SARS voiced concerns about South African rules that compel it to account for all income assets, including digital currency. In the notification, the government claims to have contacted crypto exchanges and people dealing or holding crypto assets to submit user data for tax compliance.

SARS said it is working with the Financial Sector Conduct Authority (FSCA) to give crypto asset service provider information. SARS said it receives information from local exchanges and will soon incorporate crypto assets in its tax compliance program.

Additionally, the agency was in contact with other tax authorities globally to improve multilateral agreements on South African offshore crypto accounts. The Minister of Finance will sign the agreements in November, according to the release.

The commission said crypto taxpayers would find filing easier. SARS said it will expand its audit teams to catch non-compliant taxpayers.

Commissioner Edward Kieswetter advised South African crypto fans to comply and report any revenue to SARS. He cautioned that authorities would hold non-compliant parties responsible.

SARS said it will use AI and machine learning technologies to improve compliance. The authority said it sent taxpayers interested in digital assets question letters about crypto investments for compliance.

The FSCA classified crypto assets as financial products in 2022. The regulator began licensing crypto-related firms in June 2023. In July, the authorities received 383 license applications. The government granted 63 applications and rejected 5 for not meeting regulatory standards.

In order to govern the crypto business, the FSCA cracked down on illicit, non-compliant crypto operations. The agency is examining 30 examples of unlicensed businesses in South Africa.

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