OECD: Tax transparency framework for cryptoassets, proposed amendments to CRS

Proposed amendments to the common reporting standard for the automatic exchange of financial account information among countries

Proposed amendments to the common reporting standard (CRS)

The Organisation for Economic Cooperation and Development (OECD) today published a Crypto-Asset Reporting Framework [PDF 1 MB] (CARF), which includes proposed amendments to the common reporting standard (CRS) for the automatic exchange of financial account information among countries.

Today’s release follows the OECD’s publication in March 2022 of a public consultation document [PDF 1 MB] concerning CARF. Read TaxNewsFlash

According to today’s OECD release, the new transparency initiative, developed together with G20 countries, comes against the backdrop of a rapid adoption of the use of cryptoassets for a wide range of investment and uses. Unlike traditional financial products, cryptoassets 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 cryptoasset holdings. The crypto market has also given rise to new intermediaries and service providers, such as crypto exchanges and wallet providers, many of which currently remain unregulated. These developments mean that cryptoassets and related transactions are not comprehensively covered by CRS, increasing the likelihood of their use for tax evasion while undermining the progress made in tax transparency through the adoption of the CRS.

In this vein, the CARF will ensure transparency with respect to cryptoasset transactions, through automatically exchanging such information with the jurisdictions of residence of taxpayers on an annual basis, in a standardized manner similar to the CRS. 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. Carve-outs are foreseen for assets that cannot be used for payment or investment purposes and for assets already fully covered by the CRS. Entities or individuals that provide services effectuating exchange transactions in cryptoassets for, or on behalf of customers would be obliged to report under the CARF.

The CARF contains model rules that can be transposed into domestic legislation, and commentary to help administrations with implementation. Over the next months, the OECD will be taking forward work on the legal and operational instruments to facilitate the international exchange of information collected on that basis of the CARF and to ensure its effective and widespread implementation, including the timing for starting exchanges under the CARF.

The OECD has also put forward to the G20 a set of further amendments to the CRS, intended to modernize its scope to comprehensively cover digital financial products and to improve its operation, taking into account the experience gained by countries and business. As with the CARF, this work will be complemented with an update to the international legal and operational mechanisms for the automatic exchange of information pursuant to the amended CRS, as well as with a coordinated timelines to bring the agreed amendments into effect.


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