OECD proposes new crypto-asset reporting tax transparency rules

Thursday, 24 March 2022
The OECD Global Forum on Transparency and Exchange of Information for Tax Purposes has begun consultation on new rules requiring crypto-asset exchanges to report customers' aggregate investments and transactions to national governments, so that the information can be shared internationally.
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Individuals' financial account information has been automatically exchanged between national governments under the OECD's Common Reporting Standard (CRS) since 2017. Since then, crypto-assets such as virtual currencies have been rapidly adopted for many investment and financial activities, says the OECD. It warns that as crypto-assets can be transferred and held without the intervention of traditional financial intermediaries, and without any central authority having full knowledge of the transactions or the holdings they can be exploited to undermine the CRS and other international tax transparency initiatives.

In 2020, the G20 group of countries asked the OECD to develop a framework for the automatic exchange of information on crypto-assets. Preliminary consultations were held with national tax authorities, the crypto-asset industry and professional bodies, including STEP. The first draft , called the Crypto-Asset Reporting Framework (CARF), has now been issued for further consultation.

CARF sets out a plan for tax administrations to collect and exchange information about persons engaging in crypto-asset transactions, in particular those crypto-assets that can be held and transferred without the intervention of traditional financial intermediaries. It aims to ensure that individuals and entities that provide business services to exchange crypto-assets (for other crypto-assets or for fiat currencies) apply standard due-diligence procedures to identify their customers and then report the aggregate values of the exchanges and transfers for these customers annually.

In conjunction with this plan, the OECD also proposes to extend the CRS' scope to cover electronic money products and central bank digital currencies, so that crypto-asset trading information can be automatically exchanged between countries. The CRS will also be amended to cover indirect investments in crypto-assets through investment entities and derivatives. The OECD says that improvements will be made to due-diligence procedures and reporting outcomes, to make CRS information more usable by tax administrations and to limit the burdens on financial institutions.

Public comments on the proposals can be submitted until 29 April 2022 and a public consultation meeting will be held at the end of May 2022. The OECD hopes to report the outcomes at the G20's October 2022 meeting. STEP will respond to the consultation.

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