Sars Intensifies Focus on Crypto Tax Compliance in South Africa

You can also listen to this podcast on iono.fm here . JEREMY MAGGS: Now crypto, I read, is rapidly losing one of its old attractions for taxpayers. What am I talking about? Well, the relative invisibility. From March this year, South Africas new crypto asset reporting framework began requiring crypto service providers to collect detailed transaction information for Sars (South African Revenue Service), including purchases, disposables and wallet transfers. So I think the big question for companies is becoming less about whether Sars can see the crypto and more about whether they can justify how they have accounted for it. Joining me now is Mohammed Mayet, who is director and head of tax at HLB CBS Group South Africa. Mohammed, thank you very much indeed. Is this really then a crypto tax crackdown, or is Sars simply getting better at seeing transactions that were always taxable in the first place? MOHAMMED MAYET: Greetings to you, Jeremy, and thank you for the opportunity and greetings to your listeners. I think its a very important question, and its a balancing act between the Sars crackdown on crypto trades per se, together with something that has already been there for a period of time where the revenue authorities seeing that theres a potential pot of extra revenue where taxpayers in the South African context have not accounted for crypto correctly in their tax return, in whichever form or manner. So, its a balancing act of the combination of both. JEREMY MAGGS: Is crypto becoming more widespread in terms of use in that respect, do you think? MOHAMMED MAYET: Yeah. Current data is showing approximate figures of about six million South Africans, whether taxpayers registered or not registered. But about six million South Africans playing in the crypto space. Initially, if you look at six million people playing in crypto space, one would then from a revenue authority perspective, think, okay, so are these six million people making profits, losses, are they playing offshore at other platforms around the world and, do I, as Sars get my rightful share of taxes where the taxes are due? On that basis, yes, it is it is a broader issue to look at in terms of revenue flows to the authority, which the authority believes that there are crypto taxes that are due to us in whichever form or manner through this number of people trading in crypto throughout South Africa. JEREMY MAGGS: The framework, as I understand it, requires service providers then to report transactions to Sars. All well and good. Mohammed, how much more visibility then does Sars have than it perhaps had in the past? MOHAMMED MAYET: Historically, there was no visibility. Then obviously, the data started showing so many South Africans, as Ive mentioned, who are dealing or trading in crypto and hence the reporting framework from a SA perspective started beefing up. That means that reporting framework requires two things. The first thing it requires is reporting of certain information, data information, user information, platform information, number of trades, all these finer details are now providing the data intelligence that Sars needs and Sars would then do its own, in the second instance, its own data mining and then filter that to, by way of example, an individuals tax return or business tax return or whomever and see exactly, okay, we have a reasonable amount of data to make a determination that you have traded with crypto on these platforms. And the suggestion is that you have traded so much, where is your declaration. Have you made a profit? Have you made a loss? Whatever the case is. So the data integrity is becoming more and more of an important factor to make the determination. So its definitely a beef up in that reporting framework. JEREMY MAGGS: So does using then an offshore exchange or even moving crypto into a private wallet still offer taxpayers any meaningful degree or form of anonymity? MOHAMMED MAYET: In general, when the platforms move, whether you move