The South African Revenue Service (SARS) is reportedly sending out audit requests for cryptocurrency trading activity disclosures according to various news media outlets in South Africa.
The tax audit request seeks the following information:
- The purpose for which the taxpayers purchased cryptocurrency
- A letter from the trading platform(s) confirming the investments and the relevant trading schedules for the period and bank statements
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According to professional tax services firm, Tax Consulting South Africa:
“It is feasible to understand that SARS is in the process of ensnaring culpable taxpayers who have not disclosed their cryptocurrency-related trading profits and/or losses”
This change to the audit request process now means that crypto holders who fail to disclose their holdings risk a fine or jail term due to non-compliance in South Africa.
The tax audit request is apparently being sent to taxpayers who have not previously effected a cryptocurrency-related transaction, which indicates the SARS is actively cracking down on non-compliant traders.
Recently, the financial watchdog in South Africa, FSCA, has been pushing for tighter control of the crypto industry following the MTI ponzi scheme that saw investors lose millions in bitcoin holdings.
A draft declaration notice of crypto assets to be classified as a financial product in South Africa was also released by FSCA as an interim solution to address some of the immediate consumer risks and immediately capture intermediaries in the industry.
Following these audit requests, crypto traders in the country are advised to seek guidance to resolve this non-disclosure since any crypto transactions are bound to bring tax consequences moving forward.
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RECOMMENDED READING: [WATCH] The Digital Service Tax Will Be Applicable on Cryptocurrencies, Says Kenya Revenue Authority
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