Voluntary Disclosure (VDP) for Crypto Investors: Why You Should Act Now

Why Is VDP More Relevant Than Ever?

With the South African Revenue Service (SARS) ramping up compliance efforts and using sophisticated technology (AI) to trace cryptocurrency transactions, the Voluntary Disclosure Programme (VDP) remains a vital opportunity for taxpayers—especially crypto investors—to regularise their affairs. If you have previously omitted income or gains from your crypto trading or investments, applying for VDP can shield you from prosecution and reduce penalties.

Latest Legal and SARS Developments Affecting Crypto and VDP

1. SARS' Access to International Crypto Data

SARS participates in global tax information exchange initiatives such as the OECD's Common Reporting Standard (CRS). In 2024, SARS also began receiving third-party data from local and international crypto platforms, making it increasingly risky to ignore historical crypto profits.

2. Tax Court Case: ABC v Commissioner for SARS (2023)

In the Purveyors South African Mine Services (Pty) Ltd v Commissioner for the South African Revenue Service (135/2021)[2021] ZASCA 170 (7 December 2021) (the Purveyors case) the taxpayer appealed the decision of the Tax Court to reject the VDP application based on not being ‘voluntary’.

Takeaway: If you think SARS doesn’t know—don’t wait until they do. VDP is only open to proactive taxpayers.

3. SARS Interpretation Note on “Voluntary” (IN 52, updated 2023)

This note reaffirms that a disclosure must be:

• Voluntary (not prompted by SARS audit),

• Complete in all material respects,

• Involve a default (such as understatement or omission),

• Involve a penalty that would’ve applied.
  

  Crypto default examples:

• Failing to report airdrops, staking rewards, or capital gains,

• Misclassifying income of a capital nature,

• Omitting offshore holdings or DeFi income.

4. Penalty Mitigation

VDP applicants benefit from:

• 100% relief from criminal prosecution,

• Relief from understatement penalties,

• Reduced late payment penalties.
  

  For example, if your capital gain from crypto was R5,000,000 in a prior tax year, the potential understatement penalty (up to 200%) may be fully waived if disclosed under VDP.

Why Use a Specialist Crypto Tax Consultant for VDP?

The complexity of crypto transactions, especially when dealing with multiple platforms, tokens, or DeFi, means that a VDP prepared without crypto expertise can be incomplete or rejected.

At CryptoTaxConsult.com, we offer:

• Full audit of your crypto history

• Accurate calculation of capital gains, income, or losses

• Clear separation of capital vs income assets

• Preparation and submission of your VDP application at affordable, transparent rates.

When Should You Apply?

Immediately. If you suspect any historic non-compliance, applying for VDP before SARS contacts you is essential. Once an audit letter lands in your inbox, it may be too late.

Book a Free Crypto Compliance Assessment

We offer a no-obligation (15 minutes)consultation to determine:

• If you qualify for VDP

• What crypto-related defaults exist in your tax history?

• What SARS is likely to scrutinise.
  

  Click here to contact us or email kobus@cryptotaxconsultant.com
  
  Let’s regularize your crypto tax affairs before SARS does it for you, with penalties.

Read more about VDP HERE