47 nations have come together, pledging their commitment to the timely adoption of the Crypto-Asset Reporting Framework (CARF) by the year 2027. This international standard is set by the Organisation for Economic Cooperation and Development (OECD) in 2022. This will further revolutionize the automatic exchange of information between tax authorities.
Swift Transposition into Domestic Legislation
On November 10, a joint statement from the participating countries emphasized their dedication to “swiftly transpose” CARF into their respective domestic law systems. This collective effort stems from a G20 mandate in April 2021. It further highlights the urgency to streamline reporting on cryptocurrency and digital asset transactions.
The CARF framework necessitates comprehensive reporting on cryptocurrency transactions, irrespective of whether they occur through intermediaries or service providers. This move aims to enhance transparency and facilitate effective tax compliance measures.
Targeted Information Exchange Agreements by 2027
The authors of the joint statement have set a clear timeline, aiming to activate information exchange agreements under CARF by 2027. Their shared vision is articulated in the statement:
“The widespread, consistent, and timely implementation of the CARF will further improve our ability to ensure tax compliance and clamp down on tax evasion, which reduces public revenues and increases the burden on those who pay their taxes.”
While the list of pledging nations encompasses all 38 OECD member states and notable financial hubs like the United Kingdom’s Overseas Territories, it falls short of representing key markets. Notably absent are countries such as China, Hong Kong, the United Arab Emirates, Russia, Turkey, and the entire African continent. Latin America is only marginally represented, with Chile and Brazil making the commitment.
Expanding International Efforts: DAC8
Notably, CARF is not the sole protocol shaping the international landscape of crypto income reporting. In October, the Council of the European Union formally adopted the eighth iteration of the Directive on Administrative Cooperation (DAC8). This cryptocurrency tax reporting rule empowers tax collectors with jurisdiction to monitor and evaluate every cryptocurrency transaction within any EU member state.