The South African Revenue Service (SARS) has reportedly asked three crypto exchanges in South Africa to submit client information for a selection of customers.
According to a local daily, the SARS requested for the information as part of a tax risk assessment exercise on residents involved in mining, speculation, and / or investment in crypto assets quoting Section 46 of the Tax Administration Act of South Africa.
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The 3 exchanges that have so far been approached and requested for client information include:
The above 3 exchanges have released a joint statement saying:
“SARS has confirmed that the primary purpose of collecting this information is for risk analysis, which will inform the need for future action with respect to crypto assets.
The conclusion of our legal advice is that per section 46 of the Tax Administration Act, along with other cryptocurrency exchanges, we are obliged to provide the information requested by SARS.”
– AltCoinTrader, Luno, VALR
The 3 exchanges have confirmed that they are only willing and obligated share customer data that is requred by law and nothing more and have ‘taken legal advice on their obligation to comply and ensure its scope is limited to the greatest extend possible.’
The above request comes just a few months after it was reported that SARS is sending out audit requests for cryptocurrency trading activity disclosures.
According to the report, 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
At the same time, Stratum, a bundled crypto investment company that allows users to earn interest on their crypto holdings via its advanced wallet, operates in South Africa and has said it will not comply with the directive by SARS.
In a statement, Rocelo Lopes, Stratum founder, said:
“We are an entire crypto-to-crypto organisation, set up to ensure we do not hold sensitive information such as bank account details of our clients, in keeping with the highest global standards of privacy of information.
Our head office is in Hong Kong, and we have no relationships with any of the banks that can be disrupted, so if you want to be a client of ours, then you are of course welcome provided you already own crypto.
We avoid any fiat on-ramps that can be attacked by regulators or banks.”
– Founder, Stratum
Stratum operates in South Africa but falls under the Hong Kong jurisdiction and thus feels it is not obliged to follow the SARS directive.
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