On March 22, 2022, the Organization for Economic Cooperation and Development (OECD) published a public consultation document concerning the Crypto-Asset Reporting Framework (CARF) as well as proposed amendments to the common reporting standard (CRS) for the automatic exchange of financial account information among countries. The document can be found here.

The new global tax transparency framework CARF provides for the collection and exchange of tax-relevant information among tax administrations, with respect to persons engaging in certain transactions in crypto-assets.

What is reportable:

  • crypto assets that can be held and transferred in a decentralized manner without the intervention of traditional financial intermediaries.
  • asset classes relying on similar technology that may emerge in the future.

Who is going to report:

  • individuals and entities that, as a business, provide services to exchange crypto-assets against other crypto-assets, or for fiat currencies, must apply the due diligence procedures to identify their customers, and then report the aggregate values of the exchanges and transfers for such customers on an annual basis.

This public consultation document contains the current draft of the first building block (i.e., Rules and commentary). Once the work on the rules and commentary is completed, the second and third building blocks will be developed (i.e., 2. Framework of bilateral or MCAA or arrangements for the AEOI collected under the CARF, 3. Technical solutions to support the exchange of information).

Beside the CARF, the OECD has also issued proposal for amendments of CRS as follows:

  • extend the scope of CRS to cover electronic money products and central bank digital currencies.
  • cover indirect investments in crypto assets through investment entities and derivatives.
  • provide an efficient interaction between the CRS and the CARF, to limit situations of duplicative reporting.
  • improve the due diligence procedures and reporting outcomes aiming to increase the usability of CRS information for tax administrations and limit burdens on financial institutions.

Currently, the OECD is waiting for public comments by April 29, 2022, that will be discussed during the meeting held at the end of May 2022. The OECD’s aim is to report back on above proposals under the Indonesian Presidency of the G20 meeting in October 2022.

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