© CoinDesk The Organization for Economic Co-operation and Development (OECD) has launched a new Crypto Asset Reporting Framework (CARF) (Getty Images)The Organization for Economic Co-operation and Development (OECD) has released its new tax framework, the Crypto Asset Reporting Framework (CARF), according to a press release on Monday.
The framework, approved in August, provides for the “automatic collection and exchange of transaction information for relevant cryptocurrencies.” The report notes that the definition of crypto-assets "includes assets that can be held and transferred in a decentralized manner without the intervention of traditional financial intermediaries, including derivatives issued in the form of stable currencies, crypto-assets and certain non-fungible tokens". He said. He said..
Associated cryptocurrencies such as exchanges, brokers, and ATM operators will also include brokers and other service providers that facilitate trading.
"The current scope of work, as well as the scope of compliance, does not provide the tax administration with sufficient visibility when taxpayers covered by the Common Disclosure Standard (the existing standard) engage in transactions taxes or hold related cryptocurrencies." Therefore, in the report, the OECD has developed this new framework.
CARF was created in light of the rapid growth in the cryptocurrency industry. Last year, the industry went from a market capitalization of $715 billion in January to nearly $3 trillion before collapsing this year. Furthermore, these developments are in line with recent developments of the FATF Global Anti-Money Laundering Rules.
However, in May, the cryptocurrency industry rejected the tax reporting system for cryptocurrencies at a meeting of the Organization for Economic Co-operation and Development.
The CARF rules define what crypto companies must report in the countries in which they operate. Exchanges between cryptocurrencies and associated fiat currencies must be reported, including exchanges between one or more types of cryptocurrency and transfers of cryptocurrency (including retail payment transactions).
Similar to the OECD Common Reporting Standard (CRS), the framework's due diligence process requires that individual customers, entities and controlling persons be identified. Indirect investments in cryptocurrencies through derivatives and investment vehicles are also now covered by the CRS. Changes have also been made to include central bank digital currency in CRS instead of CARF. The CRS defines due diligence procedures, as well as the sharing and reporting of financial account information.
The report noted that in addition to these standards, “work is underway on an implementation package to ensure consistent national and international implementation of the CARF.”