OECD (the Organization for Economic Cooperation and Development) announced the introduction of a global tax transparency framework to address the need to report and exchange information about crypto-assets as part of the regulatory framework.
Fighting Criminal Activities
As part of its efforts to respond to a global call made by the G20 for the development of a framework for the automated exchange of information between countries on crypto assets, the OECD has developed the Crypto Asset Reporting Framework (CARF).
OECD Secretary-General’s Tax Report will be presented to OECD Finance Ministers and Central Bank Governors in Washington D.C., as part of their discussions during their next meeting on 12-13 October, as part of the latest OECD Secretary-General’s Tax Report.
A new transparency initiative, developed together with the G20 countries, comes at a time when crypto-assets are being used in an increasingly wide range of investment and financial applications following a rapid adoption of crypto-assets over the past few years.
There is no need for traditional financial intermediaries to be involved with the transfer and holding of crypto-assets, as traditional financial intermediaries like banks cannot be involved. Additionally, no central administrator has full visibility into transactions that are carried out or holdings of crypto-assets.
As a result of the crypto market, many new intermediaries and service providers have emerged as well, such as crypto-asset exchanges and wallet providers. Many of these sites are currently unregulated and are not subject to any regulation.
OECD Secretary-General Mathias Cormann said:
“The Common Reporting Standard has been very successful in the fight against international tax evasion. In 2021, over 100 jurisdictions exchanged information on 111 million financial accounts, covering total assets of EUR 11 trillion.”
By using standardized methods similar to the CRS, the CARF will ensure transparency in regard to crypto-asset transactions, by exchanging this information on an annual basis with the jurisdictions of residence of taxpayers, in a way similar to the CRS, in order to ensure transparency in regards to crypto-asset transactions.
An important component of the CARF is the model rules, which can be transposed into domestic law, as well as a commentary that can assist administrations in implementing the model rules.
It is expected that the OECD will continue to work on the legal and operational instruments that would facilitate the exchange of information on the basis of the CARF in the next few months, as well as ensure that the CARF is effectively implemented and widely implemented, along with the timing at which it will be implemented.