SARS is coming after these taxpayers hard in South Africa
The South African Revenue Service (SARS) is swooping on crypto traders in South Africa, following moves by tax authorities globally to intensify scrutiny over trades.
South Africa has adopted the Organisation for Economic Cooperation and Development’s (OECD) Crypto-Asset Reporting Framework (CARF) and an updated Common Reporting Standard (CRS).
According to tax experts at Tax Consulting South Africa, this represents a significant advancement in compliance with international tax standards and the eradication of crypto-tax evasion.
“The implementation of these regulations aims to foster the automatic exchange of tax-related information concerning both traditional financial assets and emerging crypto-asset classes,” the group said.
“Compliance is essential for financial institutions and crypto service providers, and any evasive tax strategies will be unravelled by SARS.”
The CARF and CRS represent the world’s most comprehensive international tax transparency frameworks, and come into effect from 1 March 2026.
Along with the implementation, SARS is expected to make significant changes in financial and crypto-asset reporting.
The regulations introduce strict disclosure and due diligence requirements for financial institutions and crypto service providers.
The CARF, outlined in a late November Government Gazette, details the obligations for reporting crypto-asset service providers regarding crypto transactions and user identities.
Crucially, the framework is aimed at combating offshore tax evasion and illicit activities linked to crypto-assets, and SARS will be leaning heavily on cross-border cooperation and automatic information exchange.
The CARF imposes obligations on all “Reporting Crypto-Asset Service Providers”, including businesses or individuals that offer crypto exchange services, custody, or trading platforms.
These include:
- Identifying the entities and individuals who are subject to data collection and specific reporting requirements.
- Promoting tax transparency on reportable transactions.
- Implementing iron-clad due diligence procedures and guidelines for identifying Crypto-Asset Users and
- Controlling Persons, and their reporting obligations in relevant jurisdictions.
They must also validate user tax residency through self-certifications and retain documentation for a minimum of five years.
Non-compliance may lead to suspension of customer relations and potential penalties for tax evasion.
The revised CRS, meanwhile, is aimed at bringing new financial products, intermediaries and financial assets into its scope, which includes certain electronic money products and Central Bank Digital Currencies.
From March 2026, South African financial institutions must fully comply with stringent enhanced due diligence and reporting demands.
Crypto is in SARS’ reach
Tax consulting warned that the days of thinking crypto assets are beyond SARS’ purview and reach are long gone, and crypto traders need to be on high alert in the coming tax year.
“Be it locally or offshore, the automatic exchanges of information leave non-compliant individuals vulnerable to penalties, asset freezing, and even potential prison time,” it said.
The experts noted that the investigation into taxpayers’ offshore interests has long been on the cards with SARS.
Foreign asset or income disclosure notices have been issued as far back as 2020, entailing a blanket disclosure of offshore assets.
Alongside crypto regulations, the stronger framework under the CRS will make this an even riper target.
“This includes a keen focus on crypto asset taxation and rectifying historic taxpayer issues of non-declaration of crypto-related profits or gains,” it said.
“The CARF and CRS are not mere guidelines, but mandatory rules that will fundamentally alter reporting practices.”
The group said that taxpayers should be aware that crypto-related activities, even though on-platform and perhaps not realised for fiat gain, will soon carry even more stringent reporting requirements.
“Tax compliance starts with assuming liability for all income received and maintaining accurate financial records,” it said.
“SARS will expect individuals to prove the accuracy of their tax position, and it is therefore imperative to keep an accurate record of transactions.”
Authorised Dealers, usually commercial banks, are authorised by SARB to deal with foreign exchange.
Where large amounts of money or complicated transactions are involved, Authorised Dealers may defer to specialist teams within SARB to handle such transactions.
To ensure SARB compliance, the exchange control requirements and regulations must be adhered to.
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