South Africa’s tax agency doubles down on ‘crypto’ tax evaders

South Africa’s taxman is bracing for a crackdown on digital asset tax evaders, doubling the number of staff members in the ‘crypto’ department.

The South African Revenue Service (SARS) says digital asset owners owe billions of rand in taxes, capitalizing on vague ‘crypto’ taxation frameworks. However, the agency has been ramping up its technology to better target this group. SARS is also hiring dozens of new agents in its ‘crypto’ department, the agency told local outlet Business Day.

In the 2025/26 fiscal year, South Africa’s budget deficit is expected to hit 4.7% of its $400 billion gross domestic product (GDP). To cover the shortfall, the government has been pushing SARS to expand the tax base, and the agency believes it could raise an extra $2.8 billion this year.

The ‘crypto’ sector is one of the industries SARS believes could generate billions. According to a report by the country’s Financial Sector Conduct Authority (FSCA), there are nearly 6 million digital asset owners in South Africa, accounting for nearly 10% of the population. Another report by ConsenSys claimed that 68% of respondents from South Africa have owned digital assets at some point, the second-highest adoption rate after Nigeria.

However, of the 6 million owners, only 17,000 (0.28%) declared their digital assets in their tax returns, reveals Carel de Jager, the CEO of Silver Sixpence, a Pretoria-based blockchain software company.

This disparity is partly rooted in the crypto industry’s misguided perception that it operates beyond the limits of the law, says Carel.

“That is a big misconception and SARS definitely has its eyes on [crypto]. There are a lot of people that might receive letters very soon,” he stated.

In South Africa, digital assets have been declared as financial instruments and all exchanges are required to register as financial institutions. This makes it easy for the taxman to collect user data and sniff out tax evaders.

The crypto tax maze

Digital asset taxation is a challenge that spans beyond South Africa. Globally, few countries have streamlined ‘crypto’ tax, with many still tweaking policies as new elements like decentralized finance (DeFi), non-fungible tokens (NFTs), and staking emerge. Even the most developed markets like South Korea and India are still struggling.

Japan recently announced it would slash the digital asset taxes from 55% to 20% starting next year. Investors can also offset their losses against future gains for up to three years.

In South Africa, SARS has revamped its campaign to rake in more taxes from the digital asset sector. In April, SARS Commissioner Edward Kieswetter called on “taxpayers, exchanges and other intermediaries to register, because now, if you don’t register, you’re breaking the law.”

“Once they have registered, we now have knowledge of their existence, and we can now begin to track their business activities,” he told Bloomberg.

The agency is also using artificial intelligence (AI) to comb through millions of banking records to detect non-compliance, reveals Tax Consulting SA’s Jashwin Baijoo. It has also ordered all exchanges to submit their trading records for tax evasion scrutiny.

Baijoo believes that millions of South African traders will receive letters from SARS indicating that the agency has detected some form of risk in their accounts.

“That’s when taxpayers need to lawyer up because there’s something that SARS has directed. As soon as you get that notice, chances are SARS is coming after you for some degree of non-compliance,” he added.

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