End of the line for these taxpayers in South Africa

South Africa’s adoption of new global reporting standards for financial and crypto assets signals the end of crypto tax evasion, giving SARS unprecedented transparency and enforcement power.

This was explained by Tax Consulting SA partner and head of strategic engagement and compliance Jashwin Baijoo.

“As the cryptocurrency market rapidly expands and the global financial landscape evolves, tax authorities worldwide are intensifying their efforts to maintain transparency and combat tax evasion,” Baijoo said.

“Compliance is essential for financial institutions and crypto service providers, and any evasive tax strategies will be unravelled by the South African Revenue Service (SARS).”

South Africa has recently adopted the Organisation for Economic Cooperation and Development’s (OECD) Crypto-Asset Reporting Framework (CARF) and an updated Common Reporting Standard (CRS).

This, Baijoo said, represents a significant advancement in compliance with international tax standards and the eradication of crypto tax evasion.

“The implementation of these regulations aims to foster the automatic exchange of tax-related information concerning both traditional financial assets and emerging crypto asset classes,” he said.

South Africa will implement this framework, the most comprehensive international tax transparency framework in the world, on 1 March 2026.

As the country prepares for this date, Baijoo explained that significant changes in financial and crypto asset reporting are anticipated.

“These regulations introduce strict disclosure and due diligence requirements for financial institutions and crypto service providers,” he said.

The CARF, outlined in the Government Gazette on 28 November 2025, details the obligations for reporting crypto-asset service providers regarding crypto transactions and user identities.

“This framework aims to combat offshore tax evasion and illicit activities linked to crypto-assets through enhanced multilateral cooperation and automatic information exchange,” Baijoo explained.

The CARF imposes obligations on all “Reporting Crypto-Asset Service Providers”, including businesses or individuals that offer crypto exchange services, custody, or trading platforms –

• Identifying the entities and individuals who are subject to data collection and specific reporting requirements
• Promoting tax transparency on reportable transactions
• Implementing iron-clad due diligence procedures and guidelines for identifying crypto-asset users and controlling persons, and their reporting obligations in relevant jurisdictions
• They must validate user tax residency through self-certifications and retain documentation for a minimum of five years
• Non-compliance may lead to suspension of customer relations and potential penalties for tax evasion

“As a crypto trader, the days of thinking your crypto assets are beyond SARS’ purview, and long gone,” Baijoo warned.

“Be it locally or offshore, the automatic exchanges of information leave non-compliant individuals vulnerable to penalties, asset freezing, and even potential prison time.”

Common Reporting Standard

The updated CRS, found in Government Gazette No. 53735, governs the automatic exchange of financial account information globally, Baijoo explained.

“From March 2026, South African financial institutions must fully comply with stringent enhanced due diligence and reporting demands,” he said.

“The revised CRS is aimed at bringing new financial products, intermediaries and financial assets into its scope, which includes certain electronic money products and Central Bank Digital Currencies.”

Notably, Baijoo said the investigation into South African taxpayers’ offshore interests has long been on the cards with SARS.

In fact, foreign asset and income disclosure notices have been issued as far back as 2020, entailing a blanket disclosure of offshore assets.

“Alongside crypto regulations, South Africa strengthens its compliance framework under the CRS for traditional financial accounts held by foreign residents,” Baijoo said.

Financial institutions, including banks and investment entities, must now conduct enhanced due diligence to identify Reportable Persons, and account reporting will encompass balances, gross interest, and dividends.

“The CARF and CRS are not mere guidelines, but mandatory rules that will fundamentally alter reporting practices,” Baijoo stressed.

South Africa engages in multilateral agreements for data exchange, which magnify exposure to unreported accounts.

The revenue service’s enforcement capabilities also include penalties, relationship terminations, and criminal prosecution.

SARS and SARB tackle crypto tax non-compliance

SARS and the South African Reserve Bank (SARB), through existing working groups and international exchanges of information, have reiterated their already strong stance on eradicating non-compliance.

Now, through the implementation of the CARF and CRS regulations, these parties’ enforcement powers have only been further strengthened.

“This includes a keen focus on crypto asset taxation and rectifying historic taxpayer issues of non-declaration of crypto-related profits or gains, albeit without providing firm guidance to the average taxpayer,” Baijoo said.

He explained that, historically, there has been a common misconception amongst taxpayers that crypto profits or gains fall outside the South African tax net.

However, this has been addressed by the revenue collector and exchange control gatekeeper on numerous occasions.

“In short, taxpayers must be aware that crypto-related activities, even though on-platform, and perhaps not realised for fiat gain, do carry with them stringent reporting requirements,” he warned.

This, Baijoo explained, includes the declaration and payment of taxes due to these taxpayers on the benefits derived thereon.

“Tax compliance starts with assuming liability for all income received and maintaining accurate financial records,” he said.

“SARS will expect individuals to prove the accuracy of their tax position, and it is therefore imperative to keep an accurate record of transactions.”

Baijoo added that authorised dealers, usually commercial banks, are empowered by the SARB to deal with foreign exchange.

“Where large amounts of money or complicated transactions are involved, authorised dealers may defer to specialist teams within SARB to handle such transactions,” he said.

To ensure SARB compliance, he emphasised that exchange control requirements and regulations should be strictly adhered to.

“By disclosing crypto-related proceeds, under the SARS Voluntary Disclosure Programme, taxpayers can mitigate penalties, risk of criminal prosecution, and regularise their tax affairs, in one fell swoop,” he said.