The OECD Debuts New Crypto Tax Reporting Framework On The Request Of G20
- The Organization for Economic Co-operation and Development (OECD) has debuted a new global tax reporting framework, the Crypto-Asset Reporting Framework (CARF).
- The framework was requested by the G20 nations and it aims to ensure “the collection and automatic exchange of information on transactions for relevant crypto.”
- OECD stated that the recent developments in the crypto industry are not comprehensively covered under the Common Reporting Standard (CRS) by OECD/G20.
The Organization for Economic Co-operation and Development (OECD) has recently released a new global tax reporting framework, the Crypto-Asset Reporting Framework (CARF), with the cooperation of the G20 countries.
As per the Monday’s press release, the framework aims to ensure “the collection and automatic exchange of information on transactions for relevant crypto.”
Moreover, the report defines cryptocurrencies as “the assets that can be held and transferred in a decentralized manner, without the intervention of traditional financial intermediaries, including stablecoins, derivatives issued in the form of a crypto-asset and certain non-fungible tokens.”
The OECD stated that the recent developments in the crypto industry are not comprehensively covered under the Common Reporting Standard (CRS) by the OECD/G20. This, according to the regulatory agency, increases the possibility of crypto use in tax evasion, prompting the urgent need for a “transparency initiative.”
Any digital representation of value that depends on a distributed ledger with cryptographic security or a comparable technology to validate and secure transactions will be targeted by the CARF. Assets that cannot be used for investment or payment purposes as well as those that are already entirely covered by the CRS are both given carve-outs. Under the CARF, entities or individuals who perform exchange transactions in cryptocurrency for or on behalf of customers will have to submit reports.
The CARF includes model regulations that can be incorporated into domestic law as well as implementation guidance for administrations. The OECD will continue working on the legal and operational instruments over the coming months to facilitate the international exchange of data gathered in accordance with the CARF, as well as to guarantee its efficient and widespread implementation.
Notably, the new framework would cover intermediaries and other service providers offering exchanges between crypto assets, including exchanges, ATM operators, and brokers.
OECD Secretary-General Mathias Cormann commented on the successful implementation of the CRS to fight against international tax evasion. He revealed that more than 100 jurisdictions exchanged data on 111 million financial accounts in 2021, covering assets worth EUR 11 trillion.
Commenting on the Crypto-Asset Reporting Framework’s release, Cormann stated:
“Today’s presentation of the new crypto-asset reporting framework and amendments to the Common Reporting Standard will ensure that the tax transparency architecture remains up-to-date and effective.”
In this regard, the CARF aims to ensure transparency in the cryptographic transactions by automatically exchanging related information with the jurisdictions of taxpayers’ residence on an annual basis. This process is highly standardized, similar to the CRS, according to the announcement.
A crypto journalist with over 3 years of experience in DeFi, NFT, metaverse, etc. Parth has worked with major media outlets in the crypto and finance world and has gained experience and expertise in crypto culture after surviving bear and bull markets over the years.
