The Organization for Economic Co-operation and Development (OECD) has introduced a new tax reporting system for cryptocurrency transactions (CARF) to combat tax evasion.
The OECD press release notes that the structure of the system for collecting and automatically exchanging data on transactions using crypto assets was approved back in August. The definition of “crypto assets” includes assets that can be decentralized stored and transferred without the intervention of traditional financial intermediaries. In particular, we are talking about stablecoins, cryptocurrency derivatives and some non-fungible tokens (NFTs). The scope of CARF will include cryptocurrency exchanges, brokers, ATM operators and other virtual asset service providers (VASPs).
“Given the current volume of assets, as well as the number of persons falling under the Common Tax Information Exchange Standard, the tax authorities do not receive sufficient data on the cryptocurrencies with which transactions are made or owned by users. That is why the CARF system was created,” said the OECD.
The organization added that the CARF tax reporting system was developed in view of the rapid development of the crypto industry. Last year, the market capitalization of cryptocurrencies rose from $715 billion in January to $3 trillion, but has fallen sharply this year. The figure now stands at $918.9 billion. The OECD noted that its system is in line with the latest developments in the international standards of the Financial Action Task Force (FATF). CARF establishes rules according to which companies working with crypto assets are required to report transactions for the exchange between one or more digital assets, including for fiat currencies, as well as transfers of cryptocurrencies, including retail transactions.
In addition, in accordance with the Uniform Reporting Standard (CRS), individuals and legal entities are required to undergo identification. Indirect investments in crypto assets through derivatives and other investment vehicles are now also subject to the CRS. Amendments were also made to include central bank digital currencies in the CRS. The authors of the report noted that work is now underway to apply CARF at the domestic and international levels.
Earlier, the Argentine Revenue Service (AFIP) said that the international system of supervision of cryptocurrency investors will effectively identify tax evaders.
Source: Bits
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