In a move to that strengthens its regulatory outlook, the South African Revenue Service (SARS) has embraced the Crypto Asset Reporting Framework (CARF), an international initiative developed by the Organization for Economic Co-operation and Development (OECD). This framework, now adopted by over 50 countries, is set to become an integral part of South African national legislation.

The CARF, addressing the unique characteristics of crypto assets that enable transactions without traditional financial intermediaries, aims to standardize the reporting of cryptocurrency transactions. This move is crucial in the eyes of the OECD, given the challenges posed by crypto assets to traditional tax monitoring methods, hindering global progress in tax transparency.

Under this new framework, crypto holders and businesses in South Africa are obligated to report their crypto assets and transactions to SARS. The CARF seeks to establish a comprehensive regulatory framework for crypto asset reporting and taxation, offering clear guidelines for taxpayers and practitioners to ensure compliance with tax laws. SARS plans to activate exchange agreements by 2027, pending the completion of national legislative processes.

The CARF comprises rules and commentary focused on four essential building blocks, delineating the scope of crypto assets to be covered, identifying entities and individuals subject to reporting, specifying transactions subject to reporting, and outlining due diligence procedures for user identification and tax jurisdiction determination.

This move positions South Africa as the only African nation among nearly 50 countries committing to the adoption of CARF. It aligns with the country's reputation as a progressive crypto market, and signals a commitment to regulatory clarity and global standards.