SARS targets 6 million crypto holders with tough new reporting rules
Key points
Draft CARF rules put crypto service providers in compliance spotlight
SARS to receive detailed transaction-level data on crypto activities
Taxpayers urged to use VDP before enforcement actions begin
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The South African Revenue Service (SARS) released its draft Crypto-Asset Reporting Framework (CARF) regulations for public comment this week after recently sending compliance notices to thousands of crypto holders.
“South Africa’s adoption of this framework signals its commitment to international standards in financial transparency and digital asset regulation,” said Wiehann Olivier, a partner at Forvis Mazars.
The Organisation for Economic Co-operation and Development (OECD) developed CARF to address the growing use of crypto-assets in cross-border transactions and prevent tax evasion.
“This development will reshape the operational, compliance, and strategic priorities of Crypto-Asset Service Providers (CASPs), while also ushering in a new era of accountability for taxpayers,” Olivier said.
Olivier, who leads Forvis Mazars’ fintech and digital assets division in South Africa, said the draft regulations place CASPs at the centre of the compliance framework.
These entities, which include exchanges, brokers, and wallet providers, will be required to collect and report detailed information on crypto transactions, including acquisitions, disposals, transfers, and valuations.
“The scope is broad, covering not only traditional cryptocurrencies but also stablecoins and certain NFTs,” explains Olivier.
While CASPs already operate under Financial Intelligence Centre (FIC) obligations and Financial Action Task Force (FATF) Travel Rule standards, CARF introduces additional tax-specific requirements.
These include verifying tax residency and identifying reportable persons under the OECD framework.
“CASPs will need to ensure their systems can support both regulatory and tax reporting obligations in parallel. The reputational and financial risks of non-compliance are significant,” said Olivier.
“SARS has made it clear that failure to meet reporting obligations will result in penalties and enforcement actions under the Tax Administration Act. CASPs that do not adapt may face market exclusion or consolidation.”
For taxpayers, Olivier said the CARF regulations eliminate the ambiguity that has long surrounded crypto taxation.
“With SARS set to receive granular transaction-level data, under-declaration and omission will become increasingly risky,” he warned.
“Taxpayers, especially those with significant crypto holdings, must now ensure that their records are accurate, complete, and defensible.”
This includes reconciling historical transactions, calculating gains, and understanding the tax implications of staking, lending, and other crypto activities.
“The days of informal recordkeeping and selective disclosure are over. Crypto-assets must now be treated with the same level of diligence as traditional financial instruments,” said Olivier.
In cases where taxpayers have omitted crypto-related income from previous tax returns, SARS’ Voluntary Disclosure Programme (VDP) offers a structured and legally protected route to regularise their affairs.
“The VDP allows individuals and entities to disclose previously undeclared income voluntarily, potentially avoiding hefty penalties and criminal prosecution,” explained Olivier.
“Forvis Mazars encourages taxpayers who may be affected to consider this route before SARS begins enforcement based on CARF data.”
People who own crypto vs taxpayers
A 2022 study by Singapore Blockchain company Triple A indicated that over 5.8 million people, 9.44% of South Africa’s total population, currently own crypto assets.
According to the study, 43% of the population is expected to use crypto by 2030. These figures were quoted in the Financial Sector Conduct Authority’s recent crypto asset market study.
However, National Treasury also reported this year that South Africa has 7,888,615 taxpayers above the R95,750 threshold for tax exemption.
According to SARS records, another 6,557,001 people are tax registered but earn income below the threshold.
Therefore, either 73.5% of all South African taxpayers own cryptocurrency, or some people in South Africa who have crypto don’t earn enough every year for SARS to tax their income.
“Crypto is no longer a fringe asset class. It is now subject to the same scrutiny as traditional financial instruments,” said Olivier.
Beyond the technical requirements, Olivier said that CARF represents a cultural shift in how digital assets are perceived.
“This shift will influence investor behaviour, platform design, and product innovation,” he said.
“We expect to see increased demand for tax-efficient crypto investment structures, formalised reporting and better integration between crypto platforms and traditional financial institutions.”
Olivier said the draft CARF regulations are more than a compliance requirement. “They are a catalyst for modernisation, transparency, and trust in the crypto ecosystem,” he said.
“For CASPs, taxpayers, and regulators, this is a defining moment. The question now is not whether stakeholders will comply, but how quickly and effectively they will adapt.”
Olivier said South Africa was stepping into the global spotlight on crypto governance. However, with a 3 October deadline for public comments, there was limited time to engage with the draft and prepare for its implications.
*This article was first published by MyBroadband and is republished with permission