The Organization for Economic Co-operation and Development (OECD) announced on Monday releasing its new tax reporting framework, the Crypto-Asset Reporting Framework (CARF).
The framework, which was approved in August, ensures formalizing information sharing between the 38 member countries, through automatically sharing crypto-related taxpayer information between jurisdictions.
Included in the scope are intermediaries and other service providers facilitating exchanges between relevant crypto assets, such as exchanges, brokers and ATM operators.
According to the report, the crypto assets "includes assets that can be held and transferred in a decentralised 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 CARF is meant to complement the existing tax-reporting agreement between member countries, known as the Common Reporting Standard (CRS) on tax information sharing between countries.
According to the CARF's rules, the crypto asset organisations must report in the country that they operate in. Exchanges between relevant crypto assets and fiat currencies, along with exchanges between one or more type of crypto and transfers of crypto (including retail payment transactions), will need to be reported as well. Its due diligence process requires both the individual and entity customers and controlling persons to identify themselves.
"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," OECD Secretary-General Mathias Cormann stated in the press release. "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."
The OECD realized the importance of developing the framework after witnessing the exceptional growth of the crypto industry whose market capitalization nearly touched $3 trillion before plunging this year. In addition, the framework aims at combating the money laundering and criminal activities that take place in the crypto industry.
The CARF will be formally revealed during a G20 meeting of central bankers and finance ministers in Washington, D.C. this week.
