22/03/2022 – Today, 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 proposed amendments to the Common Reporting Standard (CRS) for the automatic exchange of financial account information between countries. The purpose of the consultation is to inform policy makers decisions on the possible adoption of any such framework and its related design components.
In recent years, individuals have rapidly adopted the use of crypto-assets for a range of investment and financial activities. However, unlike traditional financial products, crypto-assets can be transferred and held without the intervention of traditional financial intermediaries and without any central administrator having full visibility on either the transactions carried out, or crypto-asset holdings. Therefore, crypto-assets could be exploited to undermine existing international tax transparency initiatives, such as the CRS.
Against this background, the G20 has asked the OECD to develop a framework for the automatic exchange of information on crypto-assets. This new framework provides for the collection and exchange of tax-relevant information between tax administrations, with respect to persons engaging in certain transactions in crypto-assets. It covers crypto-assets that can be held and transferred in a decentralised manner, without the intervention of traditional financial intermediaries, as well as asset classes relying on similar technology that may emerge in the future. Individuals and entities that, as a business, provide services to exchange crypto-assets against other crypto-assets, or for fiat currencies, must apply the due diligence procedures to identify their customers, and then report the aggregate values of the exchanges and transfers for such customers on an annual basis.
Alongside the Crypto-Asset Reporting Framework (CARF), the OECD has also developed proposals as part of the first comprehensive review of the CRS, with the aim of further improving the operation of the CRS, based on the experience gained by governments and business over the past seven years since its adoption. The proposal extends the scope of the CRS to cover electronic money products and Central Bank Digital Currencies. In light of the development of the CARF, the proposals also include changes to cover indirect investments in crypto-assets through Investment Entities and derivatives. At the same time, the proposal contains new provisions to ensure an efficient interaction between the CRS and the CARF, in particular to limit instances of duplicative reporting. Finally, 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 is now seeking public comments on the above proposals. Interested parties are invited to send their comments no later than 29 April 2022 by e-mail (in Word format) to email@example.com. For more information on the CARF, the amended CRS, or to comment on the public consultation draft: view the public consultation document.
A public consultation meeting will be held at the end of May 2022.
On the basis of the input received via this public consultation, the OECD plans to finalise the rules and commentary to the CARF and the amended CRS. The OECD will also develop the exchange instruments and technical solutions needed to support reporting and exchanges pursuant to the CARF and the amended CRS. It is the OECD’s intention to report back on the CARF and the amended CRS under the Indonesian Presidency of the G20 for its October 2022 meeting.
Media queries should be directed to Achim Pross, Head of the CTPA’s International Co-operation and Tax Administration Division (+33 1 45 24 98 92) or to Philip Kerfs, Head of the Exchange of Tax Information Unit (+33 1 45 2493 50).
The views and proposals included in the consultation document neither represent the consensus views of the Committee on Fiscal Affairs or its subsidiary bodies nor prejudice the decision as to the expected implementation of the proposals, but are intended to provide stakeholders with substantive proposals for analysis and comment. Please note that all written comments received will be made publicly available on the OECD website. Comments submitted in the name of a collective "grouping" or "coalition", or by any person submitting comments on behalf of another person or group of persons, should identify all enterprises or individuals who are members of that collective group, or the person(s) on whose behalf the commentator(s) are acting. Speakers and other participants at the upcoming public consultation meeting will be selected from among those providing timely written comments.