Taxation for Cryptocurrency Transparency
More than 40 countries and jurisdictions, including South Africa, have agreed to adopt the Crypto-Asset Reporting Framework (CARF) aimed at improving tax transparency. This framework was developed by the Organisation for Economic Co-operation and Development (OECD) and is set to be implemented in March 2023. The goal of CARF is to enable automatic exchange of information between tax authorities regarding cryptocurrency exchanges, in an effort to combat offshore tax avoidance and evasion.
South Africa’s Revenue Service (SARS) pointed out the need to keep pace with the rapid growth of the crypto-asset market and to preserve recent worldwide tax transparency by adopting CARF. The implementation of this framework is expected to expand the country’s capacity to enforce tax compliance and prevent tax evasion.
Fighting Against Cryptocurrency Tax Evasion
According to SARS, the plan is to integrate CARF into national law by 2027, subject to the appropriate legislative procedures. South Africa as of now stands as the only African country that has agreed to implement CARF. Notably, the countries of China and Russia have not joined this agreement, as revealed by the HM Treasury.
South Africa Takes the Lead in Joining Crypto-Asset Reporting Framework
By becoming the first African country to adopt the CARF, South Africa is demonstrating its commitment to combatting tax evasion and ensuring tax compliance in the rapidly growing crypto-asset market. This decision puts the country at the forefront of international efforts to encourage tax transparency and clamp down on offshore tax avoidance.
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