The Organisation for Economic Cooperation and Development, or OECD, has published a framework aimed at having tax authorities achieve greater visibility on crypto transactions and the users behind them.
In an Oct. 10 announcement, the OECD said it planned to present the Crypto-Asset Reporting Framework, or CARF, to a meeting of G20 finance ministers and central bank governors on Oct. 12-13. The crypto tax framework proposed automatically exchanging information on crypto transactions between jurisdictions annually, given a rise in the number of unregulated exchanges and wallet providers.
According to the OECD, the lack of transparency in not having crypto transactions fall under the group’s and G20’s Common Reporting Standard, or CRS, increases “the likelihood of their use for tax evasion.” The framework will include carve outs for “assets that cannot be used for payment or investment purposes” and those already required for reports under the CRS.
“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,” said OECD secretary-general Mathias Cormann.
The announcement added:
“The CARF will target any digital representation of value that relies on a cryptographically secured distributed ledger or a similar technology to validate and secure transactions [...] Entities or individuals that provide services effectuating exchange transactions in crypto-assets for, or on behalf of customers would be obliged to report under the CARF.”
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Developed as the result of an April 2021 mandate from the G20, the CARF framework requires reporting on the type of cryptocurrency as well as the type of digital asset transaction — whether through an intermediary or service provider. In August, the OECD approved amendments to the CRS including bringing central bank digital currencies under the scope of its reporting.
If approved, the framework would likely facilitate information sharing on crypto transactions between the OECD’s 38 member countries — a list which includes the United States, Japan, South Korea and many nations within Europe.