As the cryptocurrency market rapidly expands and the global financial landscape evolves, tax authorities worldwide are intensifying their efforts to maintain transparency and combat tax evasion.

Compliance is essential for financial institutions and crypto service providers, and any evasive tax strategies will be unravelled by the South African Revenue Service (Sars).

South Africa's adoption of the Organisation for Economic Cooperation and Development’s (OECD) Crypto-Asset Reporting Framework (CARF) and an updated Common Reporting Standard (CRS) represents a significant advancement in compliance with international tax standards, and the eradication of crypto-tax evasion.

The implementation of these regulations aims to foster the automatic exchange of tax-related information concerning both traditional financial assets and emerging crypto-asset classes.

The New Era of Transparency: CARF and CRS Explained

As South Africa prepares to implement the world’s most comprehensive international tax transparency frameworks on 01 March 2026, significant changes in financial and crypto-asset reporting are anticipated. These regulations introduce strict disclosure and due diligence requirements for financial institutions and crypto service providers.

Crypto-Asset Reporting Framework (CARF)

The CARF, outlined in Government Gazette No. 53735 (Notice R.6887) on 28 November 2025, details the obligations for reporting crypto-asset service providers regarding crypto transactions and user identities. This framework aims to combat offshore tax evasion and illicit activities linked to crypto-assets through enhanced multilateral cooperation and automatic information exchange.

The CARF imposes obligations on all “Reporting Crypto-Asset Service Providers”, including businesses or individuals that offer crypto exchange services, custody, or trading platforms:

• Identifying the entities and individuals who are subject to data collection and specific reporting requirements.
• Promoting tax transparency on reportable transactions.
• Implementing iron-clad due diligence procedures and guidelines for identifying Crypto-Asset Users and Controlling Persons, and their reporting obligations in relevant jurisdictions.
• They must validate user tax residency through self-certifications and retain documentation for a minimum of five years.
• Non-compliance may lead to suspension of customer relations and potential penalties for tax evasion.

As a crypto-trader, the days of thinking your crypto assets are beyond Sars’ purview, and long gone – be it locally, or offshore, the automatic exchanges of information leave non-compliant individuals vulnerable to penalties, asset freezing, and even potential prison-time.

Common Reporting Standard (CRS)

The updated CRS, found in Government Gazette No. 53735 (Notice R.6886), governs the automatic exchange of financial account information globally. From March 2026, South African financial institutions must fully comply with stringent enhanced due diligence and reporting demands.

The revised CRS is aimed at bringing new financial products, intermediaries and financial assets into its scope, which includes certain electronic money products and Central Bank Digital Currencies.

It is noteworthy that the investigation into South African taxpayers’ offshore interests has long been on the cards with Sars, with foreign asset/income disclosure notices being issued as far back as 2020, entailing a blanket disclosure of offshore assets. 

Alongside crypto regulations, South Africa strengthens its compliance framework under the CRS for traditional financial accounts held by foreign residents.

• Financial institutions including banks and investment entities must conduct enhanced due diligence to identify Reportable Persons.
• Account reporting will encompass balances, gross interest, and dividends.

The Importance of Immediate Compliance

The CARF and CRS are not mere guidelines, but mandatory rules that will fundamentally alter reporting practices.

• South Africa engages in multilateral agreements for data exchange, magnifying exposure to unreported accounts.
• Sars's enforcement capabilities include penalties, relationship terminations, and criminal prosecution.

Sars and SARB Team-Up to Eradicate Crypto-Tax Non-Compliance

Sars and the South African Reserve Bank (SARB) through existing working groups, and international exchanges of information, now strengthened through the implementation of the CARF and CRS regulations, have reiterated their already strong stance on eradicating non-compliance. This includes a keen focus on crypto asset taxation and rectifying historic taxpayer issues of non-declaration of crypto related profits or gains, albeit without providing firm guidance to the average taxpayer. 

The historically common misconception amongst taxpayers, that crypto profits or gains fall outside the South African tax net has been addressed by the revenue collector and exchange control gate keeper on numerous occasions. In short, taxpayers must be aware that crypto-related activities, even though on-platform, and perhaps not realised for fiat gain, do carry with them stringent reporting requirements, including declaration and payment of taxes due on the benefits derived thereon. 

How To Avoid the Ghost of Christmas’ Past

Tax compliance starts with assuming liability for all income received and maintaining accurate financial records. Sars will expect individuals to prove the accuracy of their tax position, and it is therefore imperative to keep accurate record of transactions.

Authorised Dealers, usually commercial banks, are authorised by SARB to deal with foreign exchange. Where large amounts of money or complicated transactions are involved, Authorised Dealers may defer to specialist teams within SARB to handle such transactions. To ensure SARB compliance, the exchange control requirements and regulations should be heeded.

To avoid the inadvertent accumulation of tax debt, crypto investors and traders are advised not to take matters into their own hands but to seek professional assistance; it remains the best strategy to ensure compliance. Where you find yourself on the wrong side of Sars, there is a first mover advantage in seeking the appropriate tax advisory, ensuring the necessary steps are taken to protect both yourself and your festive spirit from paying the price for what could be the smallest of mistakes. However, where things do go wrong, Sars must be engaged legally.

By disclosing crypto-related proceeds, under the Sars Voluntary Disclosure Programme (VDP), taxpayers can mitigate penalties, risk of criminal prosecution and regularise their tax affairs, in one fell swoop. 

Written by Jashwin Baijoo, Partner and Head of Strategic Engagement & Compliance at Tax Consulting SA