(Kitco News) - The Organization for Economic Co-operation and Development (OECD) has revealed its new global tax transparency framework, which is designed to ensure “the collection and automatic exchange of information on transactions for relevant crypto-assets.”
The Crypto-Asset Reporting Framework (CARF) was constructed in response to a G20 request that the OECD develop a framework for the automatic exchange of information between countries on crypto-assets.
As cryptocurrencies experience rapid adoption around the world, their ability to be transferred and held without the need for traditional financial intermediaries, such as banks, has led to the rise of new intermediaries like crypto exchanges and wallet providers, many of which remain unregulated.
Because of this, “crypto-assets and related transactions are not comprehensively covered by the OECD/G20 Common Reporting Standard (CRS), increasing the likelihood of their use for tax evasion while undermining the progress made in tax transparency through the adoption of the CRS,” the OECD said.
According to OECD Secretary-General Mathias Cormann, “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.”
To ensure transparency for crypto-asset transactions, the CARF requires that all such information be automatically exchanged with the jurisdictions of residence of taxpayers on an annual basis, in a standardized manner similar to the CRS.
The definition of crypto assets includes “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 report said.
Any digital representation of value that “relies on a cryptographically secured distributed ledger or a similar technology to validate and secure transactions” falls under the purview of the CARF.
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Intermediaries and other service providers that facilitate exchanges between relevant crypto assets, such as exchanges, brokers and ATM operators, will also be required to report under the new framework.
Exchanges between relevant crypto assets and fiat currencies, crypto-to-crypto exchanges, and transfers of crypto – including retail payment transactions – are required to be reported. Crypto asset firms are directed to report to authorities in the country in which they conduct business.
According to the release, the next step will be for the CARF to be presented to G20 Finance Ministers and Central Bank Governors for discussion at their next meeting on October 12-13 in Washington D.C.
