South Africans could risk jail time if they don't pay their cryptocurrency taxes.

South African cryptocurrency investors may face jail time if they refuse to pay tax on earnings made from transactions utilizing cryptocurrencies such as Bitcoin (BTC).


The South African Revenue Service (SARS) may soon take efforts to punish individuals who have not paid their taxes on their crypto earnings, according to Thomas Lobban, legal manager for cross-border taxation at Tax Consulting South Africa.

For tax evaders, a criminal conviction is possible.

According to mybroadband.co.za, South African authorities have found it simpler to secure criminal convictions for tax offenders this year after the country's tax-collecting authority sent audit requests to taxpayers, asking them to divulge their cryptocurrency trades and purchases.

Since SARS has begun cracking down on unreported taxes on cryptocurrency transactions, Tax Consulting's Lobban believes it is critical that taxpayers satisfy their obligations and remain compliant.

Thomas stated that they are not aware of any convictions at this time, but SARS will most certainly set out to set an example in the near future.

“What must be proven in this regard is not only whether a taxpayer willfully committed an alleged infraction, but also if the taxpayer acted negligently – in other words, that a reasonable person would have done differently,” Lobban explained.

Unfortunately, many South African taxpayers refuse to comply with their obligations.

“Individual South African taxpayers have been largely overwhelmed from a tax viewpoint, and this, combined with other factors such as rampant government corruption, has resulted in a sharp drop in South Africans' desire to comply with their tax obligations.”

SARS is enhancing its information-gathering capabilities.

Lobban asked taxpayers to follow the law. SARS is alleged to have contacted independent cryptocurrency platforms in the nation in early June, requesting information on their clients, he added.

Many taxpayers feel that SARS will be unaware of crypto tax evasion and that crypto-asset transactions will be impossible to track, while Lobban claims that SARS is attempting to improve its information-gathering apparatus.

With tax treaties in place, SARS can enlist the assistance of foreign governments in collecting taxes. The agency can also request information on taxpayers from outside the country's boundaries from other revenue bodies.

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