SARS Compliance Program Secures Over R300 Billion in Collections

The 18th annual Tax Statistics Bulletin released by the South African Revenue Service (SARS) and the National Treasury highlights the effectiveness of the revenue collector’s compliance-oriented strategies.

SARS is marking an impressive 16.7% year-on-year increase in compliance collections, attributed to “enhanced strategies and diligent implementation of compliance measures.”

Thanks to these targeted initiatives, revenue collections have grown from R260.5 billion for the 2023/24 fiscal year to R304 billion in the 2024/25 fiscal year.

While this development is beneficial for the country’s financially constrained infrastructure, it also signifies that SARS will amplify its focused revenue collection endeavors, particularly targeting specific taxpayer groups such as crypto traders and high-net-worth individuals.

Listen: New SARS unit focuses on crypto non-compliance

SARS’s strategy? Historical audits—which can result in severe understatement penalties of up to 200% of the tax owed!

SARS’s comprehensive audit toolkit

Since the start of 2025, SARS audits have increased significantly, mainly concluding in adjustments due to taxpayers neglecting Requests for Relevant Material.

This leads to negative findings by SARS, manifesting as upward adjustments to amounts categorized as “gross income.”

The adjustments often arise from the evaluation of taxpayer bank accounts; unexplained credit transactions may be assumed to constitute income, resulting in additional taxes for which the taxpayer is fully responsible.

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Advancements in technology and machine learning now allow SARS to access taxpayer data from crypto trading and investing platforms, aiding the revenue authority in determining owed crypto taxes.

Crucially, for these adjustments to be implemented, SARS must issue additional assessments which, in instances of severe non-compliance, can incur “understatement penalties” of up to 200% of the owed tax!

Avoiding criminal charges linked to crypto non-compliance

SARS is sending out Notices of Audit and Requests for Relevant Material regarding the crypto sector.

Individuals who currently possess or have ever possessed crypto assets should not assume that past non-declaration will exempt them from future tax obligations on these profits.

Read:
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A review of previous infractions will take place, and for crypto traders who remain undetected and neglect to comply, harsh penalties—or even prison time—could ensue, as outlined in Section 234 of the Tax Administration Act, 28 of 2011:

This indicates that while taxpayers are instructed to fully disclose both local and foreign crypto transactions, the main intention is validation rather than simple data accumulation.

Heightened scrutiny on high-wealth individuals

High-wealth individuals (HWIs) typically acquire their wealth through complex, multi-tiered investment structures, both domestically and offshore.

In response to these complexities, SARS has bolstered its compliance focus on HWIs, utilizing automation and data-driven insights to improve efficiency and accuracy in identifying tax non-compliance.

Through its modernization initiatives, SARS has significantly enhanced its ability to oversee the tax affairs of HWIs, casting a wide net to enable rapid “risk detection.”

Read:
SARS follows the money [Apr 2024]
SARS’s high wealth unit is leveraging requests for relevant material [May 2024]

To reduce tax risks, SARS has appointed dedicated relationship managers for affluent taxpayers, maintaining meticulous oversight of their tax matters.

With improved surveillance, data-sharing capabilities, and automation, SARS can now identify offshore assets and ensure their complete declaration.

Statistically, verified revenue contributions from this segment reached R11.76 billion in the last fiscal year.

If you think SARS will permit that figure to decline, think again!

This proactive strategy not only enforces compliance but also aids in the precise evaluation of tax obligations, minimizing the risk of legal issues for the taxpayer.

Introduction of wealth-seeking initiatives

As SARS continues to strengthen its compliance programs, non-compliant taxpayers should expect expensive ramifications.

Commencing a compliance initiative with a clearly defined goal is something SARS is recognized for, and it seems this is also the aim here—ensuring total disclosure of all interests, whether in South Africa, offshore, or in the Metaverse.

By staying informed and proactive with their compliance strategies, both HWIs and cryptocurrency traders or investors can confidently navigate the tax landscape, contributing their fair share to tax revenue.

Read:
Reducing your tax debt without cutting corners
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New global reporting standards eliminate crypto-tax evasion

As taxpayers find themselves in a potentially precarious position, now required to disclose previously undeclared interests, including crypto assets, seeking the assistance of a tax professional for an optimal compliance strategy is recommended.

However, if a taxpayer has already made an independent disclosure and subsequently faces an audit, consulting experienced tax attorneys can help navigate the complexities of tax legislation, optimizing compliance and preventing possible prosecution and loss of valuable assets.

Jashwin Baijoo is a partner and head of strategic engagement & compliance at Tax Consulting SA.

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