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South African Crypto Traders Risks Two Years In Prison For Tax Evasion
South Africa’s tax authority, the South African Revenue Service (SARS), has recently requested that every taxpayer in the country send it an audit of their cryptocurrency purchases and trades.
According to a Tax Consulting South Africa report, a South African firm offering tax advice, consulting, and compliance services, the company said that it had been approached by many taxpayers who had received the audit request.
SARS had requested basic information regarding each taxpayer’s returns in addition to the reason for any crypto purchase, a letter from the exchange confirming the purchase, and other important trading schedules and bank statements.
Two Years Jail Term
The tax consulting firm disclosed that if a taxpayer willfully fails to submit the information requested by the SARS or even tries to give a false statement or document, it will be termed a criminal offense.
Consequently, taxpayers who fail to give accurate information regarding their cryptocurrency income may be convicted for an offense and be liable to a fine or imprisonment for up to two years.
The firm said, “It is no longer material whether the taxpayer concerned had justification for such non-disclosure or false statement made.“
Tax Consulting South Africa noted that this is the first time the SARS has made this type of request and indicates that the regulatory body is actively trying to stop non-compliant cryptocurrency traders in the country.
It said, “While further cryptocurrency regulation is certainly on its way, and with the international Common Reporting Standards now in full swing, audit requests are still a primary weapon in SARS’ arsenal, and the walls are closing in on non-compliant cryptocurrency traders.“
The firm further urged taxpayers who are yet to disclose any crypto purchases or trades to seek guidance on how to get their tax affairs in order and avoid the misconception that they do not owe any tax liability on their income from crypto trades.
The firm noted that all cryptocurrency transactions bring tax consequences for a taxpayer. Therefore, every transaction must be disclosed to the SARS.
Tax Consulting South Africa also gave a piece of advice to individuals who have not made any crypto purchases in the past.
It said, “There is little doubt that SARS is pursuing non-compliant cryptocurrency traders, so it is best for these taxpayers to stay ahead of the curve and ensure that their tax affairs in order beforehand.”