The South African Revenue Service (SARS) is updating its regulations and issuing tax notifications to crypto traders.
SARS is reportedly using artificial intelligence (AI) to track traders who are not complying with the regulations. Furthermore, the South African Reserve Bank (SARB) has set certain rules regarding how individuals and businesses can invest in digital assets.
The Use of AI by SARS to Track Digital Assets Traders
Recently, South Africa has recognized digital asset exchanges (where individuals trade cryptocurrencies) as official financial institutions. Consequently, many crypto exchanges have been licensed by the Financial Sector Conduct Authority (FSCA) of South Africa.
Simultaneously, SARS has taken a rigid stance regarding crypto traders by issuing tax notices and defining exchange control regulations. This is part of a broader plan to ensure crypto traders pay tax on their earnings.
Since the licensed exchanges are required to share defined information with SARS, failure to do so will be regarded as a criminal offense. Experts have affirmed that SARS is receiving information from crypto exchanges to aid in this surveillance.
It is not clear how sophisticated this AI system is, but one thing is certain. SARS is determined to use contemporary approaches to keep up with the complexities of digital asset trading.
New Rules on Crypto Purchases by SARB
- Individuals have the liberty to use their single discretionary allowance or foreign capital allowance for crypto purchases.
- Enterprises and companies are restricted from investing in cryptocurrency via their foreign direct investment channel.
- Additionally, SARB specified that transferring money across borders or using foreign currency solely to buy crypto assets is not allowed under South Africa’s exchange control regulations.
Thus, crypto traders will need to comply and exercise a higher level of caution to avoid penalties. Experts advise that traders should adapt to the situation, as the days of trading cryptocurrencies without government scrutiny are over.
Presumably, traders who want to avoid supervision altogether may need to switch to using decentralized exchanges.
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