A coalition of 47 countries, including economic powerhouses like the United States, UK, Singapore, Australia, Brazil, Canada, France, Japan, South Korea, and Switzerland, have pledged to adopt the Crypto-Asset Reporting Framework (CARF) by 2027.
This move is seen as a unified effort to address the challenges posed by the rapidly growing crypto-asset market and enhance global tax transparency.
CARF: New Rules for Everyone!
The Crypto-Asset Reporting Framework (CARF) has emerged as the new standard for seamless information exchange among tax authorities on an international scale.
On November 10, representatives from 47 governments made a joint commitment to swiftly integrate the CARF into their domestic legal systems. While the actual exchange of information is expected to kick off by 2027, this framework has been developed to facilitate the automatic exchange of standardized information regarding crypto-asset transactions annually.
Notably, the Organisation for Economic Cooperation and Development (OECD) recently unveiled the final version of the CARF and the 2023 update to the Common Reporting Standard (CRS), responding to the G20’s mandate.
Meanwhile, the list of countries that have pledged their commitment to CARF, includes all 38 member states of the OECD, including traditional financial offshore hubs like the UK’s Overseas Territories of the Cayman Islands and Gibraltar.
However, it’s crucial to note that this commitment lacks representation from significant markets such as China, Hong Kong, the United Arab Emirates, Russia, and Turkey.
Notably, African nations lack representation, with only two Latin American countries, Chile and Brazil, joining the pact.
Global Changes in the Works
CARF isn’t the sole player in international tax information exchange for crypto income. In October, the Council of the European Union formally adopted the eighth iteration of the Directive on Administrative Cooperation, known as DAC8.
DAC8 is the cryptocurrency tax reporting rule that empowers tax authorities to monitor and assess every crypto transaction within any EU member state.
What are your thoughts on the new Crypto-Asset Reporting Framework? Do you think it will be effective in combating crypto tax evasion?