news.bitcoin.com
The South African government is tightening its grip on cryptocurrency trading. Tax authorities (SARS) are issuing tax notices and clarifying regulations, likely using AI to identify non-compliant traders. The central bank meanwhile has clarified rules for crypto purchases, allowing individuals limited investment but restricting companies.
SARS Using AI to Track Down Tax Dodgers
South African Revenue Services (SARS) has reportedly intensified its focus on crypto traders. The agency is issuing tax notices and clarifying exchange control regulations. According to a report, SARS is basing these actions on information obtained from crypto exchanges.
This approach represents an escalation in SARS’s efforts to enforce tax compliance within the crypto sector. It follows South Africa’s recent decision to formally recognize digital asset exchanges as financial institutions, making them one of the first African countries to do so .
The Financial Sector Conduct Authority (FSCA) has since issued licenses to several dozen digital asset firms. Under regulations governing crypto assets, these licensed entities are required to share certain information with SARS. Failure to comply with this requirement can be considered a criminal offence under South African tax law.
The report, authored by tax experts at Webber Wentzel, also suggests that SARS might be utilizing artificial intelligence (AI) to identify non-compliant crypto traders.
“To crack down on non-compliance, Sars appears to be leveraging artificial intelligence (AI) technology. However, the full extent of AI’s implementation in identifying non-compliant crypto traders remains uncertain. This innovative approach reflects Sars’ commitment to modernising its enforcement mechanisms to address the complexities of digital asset trading,” the experts stated.
Meanwhile, the experts noted the South African Reserve Bank (SARB) has clarified its stance on crypto asset purchases. According to the SARB, individuals can use their single discretionary allowance or foreign capital allowance to acquire crypto assets, but companies cannot invest in them through foreign direct investment dispensation. The SARB has also stated that cross-border or foreign exchange transfers solely for crypto asset purchases are not allowed under exchange control regulations.
Consequently, the increased scrutiny from SARS and SARB signifies a new era of accountability and transparency. Traders must now navigate this more complex regulatory landscape to ensure compliance and avoid penalties. Experts also warn that the days of operating without oversight are over, and traders must learn to adapt to these changes to protect their financial interests.