Key takeaways:
- A collective commitment has been made by just under 50 national governments to “swiftly transpose” the new worldwide standard on CARF.
- The authors of the statement plan to initiate exchange agreements so that information transfers can start by 2027.
A collective commitment has been made by just under 50 national governments to “swiftly transpose” the new worldwide standard on automatic information transmission between tax authorities, known as the Crypto-Asset Reporting Framework (CARF), into their local legal frameworks. On November 10, the statement was made public.
The Organisation for Economic Cooperation and Development’s (OECD) standards serve as the foundation for the CARF, which was globally announced in June 2023, according to a statement released by the Inland Revenue Authority of Singapore (Iras).
The automatic exchange of tax-relevant data on crypto assets is essentially made possible by CARF. This mechanism plays a crucial role in managing the swift expansion of the cryptocurrency asset market.
It seeks to protect the most recent developments in international tax transparency. Acting as a comprehensive tool, the framework makes it easier to trace different cryptocurrency transactions that take place worldwide.
The CARF framework was created in response to a G20 directive from April 2021 that mandates reporting on the kind of cryptocurrency and digital asset transactions, including those made through intermediaries or service providers.
The authors of the statement plan to initiate exchange agreements so that information transfers can start by 2027. As stated in the text:
“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.”
All 38 OECD members and a few well-known offshore financial havens, such as Gibraltar and the Cayman Islands in the United Kingdom, are on the list of nations that have pledged.
But because it is focused on Europe, it ignores essential markets like Turkey, the United Arab Emirates, China, and Hong Kong. There are only two countries in Latin America, Chile, and Brazil, and not one in Africa.
Iras highlighted Singapore‘s compliance with global tax transparency requirements. Furthermore mentioned is its membership in the Global Forum on Transparency and Exchange of Information for Tax Purposes.
