The latest 18th annual Tax Statistics Bulletin from the South African Revenue Service (Sars) and National Treasury highlights the effectiveness of their compliance-driven strategies.
Sars reports a remarkable 16.7% year-on-year increase in compliance collections, attributed to “enhanced strategies and careful execution of compliance measures.”
This focused approach has led to a rise in revenue collection from R260.5 billion for the 2023/24 fiscal year to R304 billion in the 2024/25 fiscal year.
While this reflects positively on South Africa’s financially strained infrastructure, it indicates that Sars will ramp up targeted revenue collection efforts, particularly targeting specific taxpayer segments such as crypto traders and high-net-worth individuals.
Listen: New Sars unit aims to combat crypto non-compliance
What’s Sars’s chosen method? Historical audits—which could result in steep understatement penalties of up to 200% of the owed tax!
Sars’s extensive audit toolkit
Since early 2025, Sars audits have increased significantly, mainly leading to adjustments due to taxpayers neglecting Requests for Relevant Material.
This can lead to unfavorable findings, resulting in upward adjustments in amounts classified as “gross income.”
Such adjustments often arise from analyzing taxpayer bank accounts; if a credit transaction cannot be clarified, it is assumed to be income, prompting additional taxes based on these escalated amounts, for which the taxpayer is entirely liable.
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Thanks to advancements in technology and machine learning, Sars can now access taxpayer data from crypto trading and investment platforms, aiding in the determination of owed crypto taxes.
For these adjustments to be effective, Sars must issue additional assessments, which, in cases of considerable non-compliance, can lead to “understatement penalties” of up to 200% of the owed tax!
Stay clear of criminal charges due to crypto non-compliance
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Sars is issuing Notices of Audit and Requests for Relevant Material concerning the crypto industry.
Individuals who currently possess or have ever possessed crypto assets should not believe that past non-declaration will keep Sars from pursuing taxes on these profits moving forward.
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A review of previous violations will take place, and for crypto traders who evade detection and fail to comply, serious penalties—or even imprisonment—may be on the horizon, as outlined in Section 234 of the Tax Administration Act, 28 of 2011:
Excerpt from Page 2 of the Sars Request for Information regarding crypto asset transactions. Source: Sars
This indicates that while taxpayers are expected to fully disclose local and foreign crypto transactions, the primary intent is verification rather than just data collection.
Increased focus on high-net-worth individuals
High-net-worth individuals (HWIs) often accumulate wealth through complex and layered investment structures, both locally and offshore.
In response to these complexities, Sars has sharpened its compliance focus on HWIs, utilizing automation and data-driven insights to enhance efficiency and accuracy in identifying tax non-compliance.
Through modernization, Sars has substantially improved its ability to oversee and manage the tax affairs of HWIs, employing a broad approach to enable swift “risk detection.”
Read:
Sars traces the money [Apr 2024]
Sars’s high wealth unit leverages requests for relevant material [May 2024]
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To minimize tax risks, Sars has appointed dedicated relationship managers for wealthy taxpayers, ensuring close supervision of their tax situations.
With enhanced surveillance, data-sharing capacities, and automation, Sars is now equipped to find offshore assets and guarantee their complete declaration.
Statistically, confirmed revenue from this demographic reached R11.76 billion in the last fiscal year.
If you think Sars will let that figure drop, think again!
This proactive approach not only enforces compliance but also facilitates accurate assessments of tax liabilities, lowering the risk of legal complications for taxpayers.
Launch of wealth-seeking initiatives
As Sars continues to enhance its compliance programs, non-compliant taxpayers should prepare for costly consequences.
Initiating a compliance initiative with a clear endpoint is something Sars is recognized for, and this situation appears to align with that—ensuring complete disclosure of all interests, whether in South Africa, offshore, or in the Metaverse.
By maintaining awareness and proactively managing their compliance, both HWIs and cryptocurrency traders or investors can navigate the tax landscape confidently, ensuring they contribute their fair share to tax revenue.
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As taxpayers find themselves in a potentially precarious position, now required to disclose previously undeclared interests, including crypto assets, seeking guidance from a tax professional for optimal compliance strategy is recommended.
Moreover, if a taxpayer has already made an independent disclosure and later faces an audit, collaborating with seasoned tax attorneys will be beneficial in navigating the complexities of tax legislation, optimizing compliance, and avoiding prosecution or the loss of valuable assets.
Jashwin Baijoo is a partner and head of strategic engagement & compliance at Tax Consulting SA.
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