OECD initiates a public consultation on tax transparency framework for crypto-assets and common reporting standard amendments regarding digital funds
On 22 March 2022, the OECD released a public consultation document concerning a new global tax transparency framework to provide for the reporting and exchange of information with respect to crypto-assets, as well as amendments to the Common Reporting Standard (CRS) for the automatic exchange of financial account information between countries.
This consultation is the result of an initiative from the G20 addressed to the OECD in response to the increasing use of crypto-assets and other non-traditional financial products that can be held and transferred without the intervention of financial intermediaries and thus falling outside the current scope of the CRS.
Thus there is a proposal to introduce the Crypto-Asset Reporting Framework (CARF) requiring due diligence to be carried out by so-called crypto-asset service providers for crypto-asset users and reporting on the latter’s crypto-asset transactions. That information will then be automatically exchanged between relevant tax authorities.
A “crypto-asset” is defined as “a digital representation of value that relies on a cryptographically secured distributed ledger or a similar technology to validate and secure transactions”. It will include stablecoins, derivatives issued in the form of crypto-assets and certain non-fungible tokens and is intended to cover asset classes relying on similar technology that may emerge in the future.
Alongside the CARF and as part of its first significant review of the CRS, the OECD is proposing a set of amendments to the CRS so as to ensure that e-money products are treated in the same way as traditional bank accounts. At the same time, there are new provisions proposed to ensure a proper interface between the CARF and the CRS so as to avoid duplicative reporting. Also, the amended CRS seeks to improve the due diligence procedures and reporting outcomes, with a view to increasing the usability of CRS information for tax administrations and limiting burdens on Financial Institutions, where possible.
The OECD’s press release can be found here.
The public consultation document can be found here.