Just below 50 national governments have jointly pledged to promptly incorporate the Crypto-Asset Reporting Framework (CARF) into their domestic legal systems. CARF is a new international standard that facilitates the automatic exchange of information between tax authorities. The statement announcing this commitment was released on November 10th.
The Organisation for Economic Cooperation and Development (OECD) introduced CARF in 2022, following a mandate from the G20 in April 2021. Under this framework, reporting is required for both cryptocurrency and digital asset transactions, whether conducted through intermediaries or service providers.
The authors of the statement aim to establish information exchange agreements and commence exchanges by 2027. The text emphasizes that the widespread and timely implementation of CARF will enhance tax compliance efforts and combat tax evasion, thereby safeguarding public revenues and alleviating the burden on law-abiding taxpayers.
The list of countries making this pledge includes all 38 member states of the OECD, as well as certain traditional financial offshore centers like the Cayman Islands and Gibraltar, which are Overseas Territories of the United Kingdom. However, it is worth noting that the list overlooks significant markets like China, Hong Kong, the United Arab Emirates, Russia, and Turkey. Furthermore, no African countries are included, and only two Latin American countries, namely Chile and Brazil, are represented.
It is important to note that CARF is not the sole international tax information exchange protocol targeting crypto income. In October, the Council of the European Union officially adopted the eighth iteration of the Directive on Administrative Cooperation (DAC8), which specifically focuses on cryptocurrency tax reporting. DAC8 grants tax authorities the jurisdiction to monitor and evaluate all cryptocurrency transactions conducted by individuals or entities within any EU member state.