SARS Compliance Program Achieves Over R300 Billion in Collections

The 18th annual Tax Statistics Bulletin released by the South African Revenue Service (Sars) and National Treasury showcases the success of the revenue collector’s compliance-focused strategies.

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

These targeted initiatives have resulted in a revenue collection rise from R260.5 billion for 2023/24 to R304 billion in the 2024/25 fiscal year.

While this is a positive outcome for the country’s financially constrained infrastructure, it simply means that Sars will intensify its targeted revenue collection efforts, particularly focusing on specific taxpayer segments like crypto traders and high-net-worth individuals.

Listen: New Sars unit targets crypto non-compliance

Sars’s method of choice? Historical audits—which can lead to severe understatement penalties of up to 200% of the owed tax!

Sars’s comprehensive audit arsenal

Since the beginning of 2025, Sars audits have surged, predominantly ending in adjustments due to taxpayers overlooking Requests for Relevant Material.

This results in adverse findings by Sars, manifesting as upward adjustments to amounts categorized under “gross income.”

The adjustments often stem from the analysis of taxpayer bank accounts; if a credit transaction cannot be explained, it is assumed to be part of the income. Additional taxes are subsequently imposed on these increased amounts, for which the taxpayer is fully responsible.

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

Importantly, for these adjustments to take effect, Sars must issue additional assessments which, in cases of extreme non-compliance, can incur “understatement penalties” of up to 200% of the owed tax!

Avoid criminal charges due to crypto non-compliance

Sars is distributing Notices of Audit and Requests for Relevant Material related to the crypto sector.

Those who currently hold or have ever held crypto assets should not assume that historical non-declaration means Sars won’t pursue tax on these profits in the future.

Read:
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A review of past infractions will be conducted, and for those crypto traders who remain under the radar and fail to comply, severe penalties—or even jail time—could be imminent, as outlined in Section 234 of the Tax Administration Act, 28 of 2011:

This implies that while taxpayers are asked to disclose local and foreign crypto transactions fully, the intent is primarily for verification rather than mere data collection.

Increased scrutiny on high-wealth individuals

High-wealth individuals (HWIs) often accumulate their wealth through intricate, multi-layered investment structures, both domestically and offshore.

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

Through its modernization efforts, Sars has significantly enhanced its ability to monitor and manage the tax affairs of HWIs, casting a wide net to enable swift “risk detection.”

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

To mitigate tax risks, Sars has assigned dedicated relationship managers to wealthy taxpayers, maintaining close oversight of their tax affairs.

With enhanced surveillance, data-sharing capabilities, and automation, Sars can now detect offshore assets and ensure their full declaration.

Statistically, confirmed revenue performance from this demographic reached R11.76 billion in the last fiscal year.

If you believe Sars will allow that figure to decrease, think again!

This proactive strategy not only enforces compliance but also aids in the precise assessment of tax liabilities, reducing the chance of legal trouble for the taxpayer.

Launch of wealth-seeking initiatives

As Sars continues to enhance its compliance programs, non-compliant taxpayers can anticipate costly repercussions.

Beginning a compliance initiative with a clear end goal is something Sars is recognized for, and it appears this is the case here—ensuring total disclosure of all interests, be it in South Africa, offshore, or in the Metaverse.

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

Read:
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As taxpayers find themselves in a potentially vulnerable position, now tasked with disclosing previously undeclared interests, including crypto assets, seeking assistance from a tax professional for optimal compliance strategy is advisable.

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

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

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