South Africa Joins Global Effort to Increase Transparency for Crypto-Assets
This marks an important step in strengthening South Africa’s alignment with global tax transparency standards.
The South African government has released draft regulations to adopt the OECD’s Crypto-Asset Reporting Framework (CARF) into domestic law. The regulations, issued under section 257 of the Tax Administration Act, 2011, are intended to give effect to paragraph (c) of the definition of “International Tax Standard” in the Act. This marks an important step in strengthening South Africa’s alignment with global tax transparency standards.
The CARF, developed and approved by the OECD’s Committee on Fiscal Affairs in 2022 and 2023, was designed to address the growing use of crypto-assets and the risks they pose to international tax compliance. It expands on the Standard for Automatic Exchange of Financial Account Information in Tax Matters, which was originally developed in response to a G20 request and adopted by the OECD Council in 2014. The framework ensures that information relevant to crypto-asset transactions will be collected by jurisdictions and exchanged automatically between countries on an annual basis.
At its core, the CARF is built around four key pillars: defining the scope of crypto-assets covered; identifying the entities and individuals subject to reporting; setting rules on which transactions and information must be reported; and establishing due diligence procedures to verify users, controlling persons, and their tax jurisdictions. These measures are aimed at preventing the erosion of recent gains in global tax transparency.
In addition to the domestic implementation rules, the CARF also provides for international cooperation mechanisms. This includes a Multilateral Competent Authority Agreement on the automatic exchange of information, bilateral arrangements where applicable, and a standardized XML schema to facilitate electronic reporting and information exchange between tax administrations.
Through the publication of these draft regulations, South Africa is reinforcing its role in the international effort to close gaps in tax reporting and combat evasion in the fast-growing crypto-asset market. The draft will be open for public comment before being finalized and formally enacted.
