New Delhi: The Organisation for Economic Co-operation and Development (OECD) has developed a new global tax transparency framework for reporting and exchange of information related to crypto assets.The framework named Crypto-Asset Reporting Framework (CARF) was developed after a G20 request that the OECD develop a framework for the automatic exchange of information between countries on such digital assets.
The CARF consists of rules and commentary which set out: i) the scope of Crypto-Assets to be covered; ii) the Entities and individuals subject to data collection and reporting requirements; iii) the transactions subject to reporting, as well as the information to be reported in respect of such transactions; and iv) the due diligence procedures to identify Crypto-Asset Users and Controlling Persons, and to determine the relevant tax jurisdictions for reporting and exchange purposes.
The CARF will be presented to G20 Finance Ministers and Central Bank Governors for discussion at their next meeting on Wednesday and Thursday in Washington DC, the intergovernmental organization OECD said in a statement on Monday.
The new transparency initiative, developed together with G20 countries, comes against the backdrop of rapid adoption of the use of crypto-assets for a wide range of investment and financial uses.
“Unlike traditional financial products, crypto-assets can be transferred and held without the intervention of traditional financial intermediaries, such as banks, and without any central administrator having full visibility on either the transactions carried out or on crypto-asset holdings,” it said, adding that the crypto market has also given rise to new intermediaries and service providers, such as crypto-asset exchanges and wallet providers — many of which currently remain unregulated.
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, said OECD Secretary-General Mathias Cormann.
“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,” Cormann said.
Further, the OECD has also put forward to the G20 a set of further amendments to the present Common Reporting Standard, intending to modernise its scope to comprehensively cover digital financial products and to improve its operation, taking into account the experience gained by countries and businesses.