Sars puts crypto exchange under magnifying glass

Over the past few years, many have speculated whether the South African Revenue Service (Sars) will approach crypto exchanges directly to disclose customer information. Many crypto investors have found that crypto is a revenue collector. I believed that it was out of reach of. But this wasn’t far from the truth – and the evidence is in the pudding.

read: Sars heats up and asks crypto exchanges for information about specific customers

After the 2020 filing season, many taxpayers received information requests from Sars asking about the cryptocurrencies they hold (or do not hold) and more related details. The kicker is that he received these letters regardless of whether the taxpayer actually engaged in cryptocurrency investment. Mostly unfocused, but in theory, this approach worked. Given that falsehood or omission in response is a crime that leads to fines or imprisonment.

In addition, with an additional R3 billion allocated to SARS to improve its technology and intelligence infrastructure, it is clear that the wall is steadily approaching non-compliance crypto investors.

Here, another major development has taken place in the crypto space. Sars has contacted the South African cryptocurrency exchange requesting information about their customers regarding Section 46 of the 2011 Tax Administration Act. The person who submits the relevant materials that Sars needs in connection with the taxpayer.

According to Sars, the purpose behind the allegedly sent requests to AltCoinTrader, Luno, and VALR is risk analysis and is to determine if further action is taken. The information requested includes transaction information about a particular customer.

What taxpayers need to understand is that SARS is a creature of law. You are bound by the rules set by law and have no authority to exceed them. All actions performed by Sars must be within and beyond these “rules of involvement”. This may have led to the conclusion that SARS has no teeth when it comes to cryptocurrency exchanges, which may have given some crypto investors a false sense of security.

As recent events have shown, Sir’s seems to be concerned about the possibility of cryptocurrencies escaping tax revenues and is doing something about this.

Indeed, SARS is currently embarking on a larger project to identify and pursue non-compliant crypto investors. This does not mean that all taxpayers are automatically subject to cryptocurrency audits in all cases, but this does mean that Thirds cannot understand what happens with cryptocurrency exchanges. It means you can no longer be sure.

It is well worth remembering that taxes are not only levied when withdrawing fiat currency from an exchange. In other words, selling cryptocurrencies to fiat currencies, or exchanging cryptocurrencies for other cryptocurrencies or for stable coins is a taxable event and funds are being withdrawn from the exchange. It cannot be simply ignored because it does not exist. We now know that it is ridiculous to assume that Thurs is unaware of these events. Sars is empowered to investigate taxpayer information obtained from third parties as needed, and cryptocurrency exchange is subject to the same laws in South Africa as everything else. Therefore, it is necessary to properly consider whether it is justified for Sars to request information about the client for cryptographic exchange.

If the taxpayer has past responsibilities, Sars will definitely find out when examining transaction records. Once this is identified by Sars and notified to the taxpayer, the taxpayer can hardly rely on it. The only rational course of action is to act proactively, and taxpayers at risk of being “discovered” need to take clues and fix problems before it’s too late.

Thomas Lobban is the Legal Manager of Tax Consulting SA.

Sars puts crypto exchange under magnifying glass

Source link Sars puts crypto exchange under magnifying glass

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