The South African Revenue Service (SARS) this week published draft regulations for the Crypto-Asset Reporting Framework (CARF) and is inviting the public to comment.
This marks an important step in bringing South Africa in line with global standards on tax transparency in the fast-growing crypto market.
The CARF, developed by the Organisation for Economic Co-operation and Development (OECD) in 2022/23, was designed to ensure gains in international tax transparency are not eroded by crypto-assets being used to hide wealth or avoid tax.
It builds on earlier standards that already require countries to automatically exchange tax-related financial information each year.
The draft regulations set out how crypto-asset service providers will be required to collect and share information about users, their transactions and the jurisdictions where they are tax residents.
The framework focuses on four main areas: which crypto-assets are covered, which entities and individuals must report, the details of transactions that must be disclosed, and the due diligence steps needed to identify users and determine their tax jurisdictions.
In addition, the regulations include international agreements to guide information exchange between countries, as well as a standard electronic format for reporting and sharing this data.
Overall, the publication of the draft CARF regulations reflects South Africa’s commitment to keeping pace with international efforts to improve transparency and close tax loopholes in the crypto space.
The deadline for public comment is 3 October, giving stakeholders limited time to engage with the draft and prepare for its implications.
In the interests of transparency
“South Africa’s adoption of this framework signals its commitment to international standards in financial transparency and digital asset regulation,” says Wiehann Olivier, partner and fintech and digital assets lead at Forvis Mazars in South Africa.
“This development will reshape the operational, compliance and strategic priorities of crypto-asset service providers (CASPs), while also ushering in a new era of accountability for taxpayers.”
Olivier notes that the draft regulations place CASPs at the centre of the compliance framework.
These entities, which include exchanges, brokers and wallet providers, will be required to collect and report detailed information on crypto transactions, including acquisitions, disposals, transfers and valuations.
“The scope is broad, covering not only traditional crypto-currencies but also stablecoins and certain NFTs [non-fungible tokens],” explains Olivier.
He points out that while CASPs already operate under Financial Intelligence Centre obligations and FATF Travel Rule standards, CARF introduces additional tax-specific due diligence requirements. These include verifying tax residency and identifying reportable persons under the OECD framework.
“CASPs will need to ensure their systems can support both regulatory and tax reporting obligations in parallel. The reputational and financial risks of non-compliance are significant.
“SARS has made it clear that failure to meet reporting obligations will result in penalties and enforcement actions under the Tax Administration Act. CASPs that do not adapt may face market exclusion or consolidation.”
For taxpayers, the CARF regulations eliminate the ambiguity that has long surrounded crypto taxation.
“With SARS set to receive granular transaction-level data, under-declaration and omission will become increasingly risky,” warns Olivier.
“Taxpayers, especially those with significant crypto holdings, must now ensure their records are accurate, complete and defensible. This includes reconciling historical transactions, calculating gains and understanding the tax implications of staking, lending and other crypto activities.
“The days of informal recordkeeping and selective disclosure are over. Crypto-assets must now be treated with the same level of diligence as traditional financial instruments.”
In cases where taxpayers have omitted crypto-related income from previous tax returns, the SARS Voluntary Disclosure Programme (VDP) offers a structured and legally-protected route to regularise their affairs, he explains.
“The VDP allows individuals and entities to disclose previously undeclared income voluntarily, potentially avoiding hefty penalties and criminal prosecution. Forvis Mazars encourages taxpayers who may be affected to consider this route before SARS begins enforcement based on CARF data.”
Increased scrutiny
Beyond the technical requirements, the firm notes that CARF represents a cultural shift in how digital assets are perceived.
“Crypto is no longer a fringe asset class. It is now subject to the same scrutiny as traditional financial instruments,” asserts Olivier.
“This shift will influence investor behaviour, platform design and product innovation. We expect to see increased demand for tax-efficient crypto investment structures, formalised reporting and better integration between crypto platforms and traditional financial institutions.”
According to Olivier, the draft CARF regulations released by SARS are more than a compliance requirement.
“They are a catalyst for modernisation, transparency and trust in the crypto ecosystem. For CASPs, taxpayers and regulators, this is a defining moment. South Africa is stepping into the global spotlight on crypto governance. The question now is not whether stakeholders will comply, but how quickly and effectively they will adapt.”
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