South Africa Revenue Service Issues Tax Notices to Crypto Traders, Using AI to Track Them Down
Legal experts at the prominent South African law firm Webber Wentzel report that these notices are part of a broader crackdown aimed at capturing taxable profits from crypto trading. Traders who fail to provide the requested information may face criminal charges under the Tax Administration Act.
SARS’ aggressive stance underscores its commitment to leaving no stone unturned in its pursuit of tax revenue.
In a related development, the Financial Sector Conduct Authority (FSCA) has approved 138 license applications for cryptocurrency asset service providers (CASPs) in South Africa.
These licensed entities are now obligated to share detailed information about their clients with regulators, enhancing transparency and compliance within the sector.
The Financial Intelligence Centre (FIC) has also introduced a preliminary directive requiring crypto platforms to disclose the identities of individuals engaged in cryptocurrency transactions. CASPs must provide personal data, including:
- Full name
- ID or passport number
- Residential address
- Date and place of birth
- Wallet address
Additionally, the South African Reserve Bank (SARB) has clarified its position on digital asset trading. According to SARB, neither the Currency and Exchanges Manual for Authorised Dealers nor the Manual for Foreign Exchange with Limited Authority permits cross-border or foreign exchange transfers explicitly for purchasing crypto assets.
However, SARB does permit South Africans to use their single discretionary allowance, which allows for investments up to R1 million per calendar year, to acquire cryptocurrencies.
This provides a regulated pathway for individual investors, although the investment of foreign direct investment funds in crypto assets remains prohibited. The regulatory landscape for corporate entities remains complex and less defined.
Given these developments, legal experts advise that cryptocurrency traders can no longer afford to operate in the shadows.
The evolving regulatory framework necessitates that traders adapt swiftly to maintain compliance and protect their financial interests.
As South Africa’s regulatory environment continues to evolve, stakeholders in the cryptocurrency sector must stay informed and responsive to these changes to navigate the complexities of compliance effectively.
