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Global crypto tax reporting crackdown


Written byDanny Talwar | Head of Tax

48 Countries Pledge to Collaborate on Crypto Tax Crackdown

Written byDanny Talwar | Head of Tax

Last updated: Tuesday, 14 November 2023

48 nations have come together in a unified commitment to expeditiously incorporate the Crypto-Asset Reporting Framework (CARF) into their domestic legal frameworks. 

The CARF, introduced by the Organisation for Economic Cooperation and Development (OECD) in 2022, emerged from a mandate set by the G20 in April 2021. This groundbreaking international standard seeks to facilitate the automatic exchange of information between tax authorities, mandating detailed reporting on cryptocurrency and digital asset transactions, whether facilitated by intermediaries or service providers.

The architects of this collaboration aim to set in motion agreements for the exchange of information, with the goal of full implementation by the year 2027. A statement from the authors of the CARF said:

"The widespread, consistent, and timely implementation of the CARF will further enhance our capacity to ensure tax compliance and combat tax evasion. These actions are pivotal in preserving public revenues and easing the tax burden on law-abiding citizens."

The list of countries making this pledge includes all 38 OECD member states and also encompasses traditional financial offshore hubs such as the United Kingdom's Overseas Territories, including the Cayman Islands and Gibraltar.

However, given its Europe-centric focus, it does not encompass key markets like China, Hong Kong, the United Arab Emirates, Russia, and Turkey. However, some key countries in South America and Africa have signed up for the initiative too, including Chile, Brazil, and South Africa.

While CARF stands as a significant step in international tax information exchange for crypto income, it is not the sole protocol in play and international information exchange already exists in non-crypto settings.

In October, the Council of the European Union officially adopted the eighth iteration of the Directive on Administrative Cooperation (DAC8), a comprehensive cryptocurrency tax reporting rule. DAC8 aims to empower tax authorities to monitor and evaluate every cryptocurrency transaction conducted by individuals or entities across all EU member states.

Whilst the CARF regulations are to be implemented by 2027, there remain unique challenges in ensuring compliance. Crypto brokers and intermediaries will need to share transactional information which will require the development of processes and systems capable of doing so.

Last updated: Tuesday, 14 November 2023

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