South Africa is one of 48 countries or territories adopting a Common Reporting Standard to help crack down on individuals who use crypto assets to dodge tax and launder money.
In a statement on Friday, 11 November 2023, the South African Revenue Service (Sars) welcomed the standard, which will enable different tax authorities to automatically exchange information relating to crypto assets.
Sars said the Crypto-Asset Reporting Framework (CARF) standard would help to keep pace with the rapid development and growth of the crypto asset market and ensure that recent gains in global tax transparency would not be gradually eroded.
“The widespread, consistent and timely implementation of the CARF will further improve our ability to ensure tax compliance and clamp down on tax evasion, which reduces public revenues and increases the burden on those who pay their taxes,” Sars said.
The Register reports that CARF was developed by the Global Forum on Transparency and Exchange of Information for Tax Purposes, with assistance from the Organisation for Economic Co-operation and Development (OECD) and G20.
The forum fosters data sharing between countries’ tax authorities so that they can better understand the international movement of money and what they are allowed to tax.
It has previously developed similar reporting standards for other types of assets and transactions.
Not just cryptocurrencies being targeted
The CARF was signed off in March 2023. Last week, the 48 countries adopting the standard set a 2027 deadline to implement it in their laws.
This time will also be used to ensure local crypto exchanges meet the requirements.
The use of the term “assets” instead of simply “currencies” suggests that the countries are also looking at the use of non-fungible tokens (NFTs) in financial crimes.
Sars said it intended to work towards swiftly transposing the CARF into domestic law and activating exchange agreements in time — subject to national legislative procedures.
“To ensure consistency and a smooth implementation for both business and governments, those of us that are signatory jurisdictions to the Common Reporting Standard will also implement, in line with the above timeline and subject to national legislative procedures as applicable, amendments to this standard as agreed by the OECD earlier this year,” Sars said.
South Africa’s crypto exchanges are already required to register for licences with the Financial Sector Conduct Authority (FSCA) before the end of 2023.
Many of them are positive about that development, however, as they argue regulatory oversight will increase public trust in crypto.
The 48 countries and territories that have agreed to adopt CARF are as follows:
- Czech Republic
- South Africa
- United Kingdom
- United States of America
- Crown Dependencies of Guernsey, Jersey, and Isle of Man
- United Kingdom’s Overseas Territories of the Cayman Islands and Gibraltar