An international infrastructure for the Crypto-Asset Reporting Framework (CARF), being developed by G20 countries and designed to ensure global transparency in crypto taxation, will be implemented in four years.
As part of a two-day summit in New Delhi, G20 leaders called for accelerating the development and implementation of the Crypto-Asset Reporting Framework (CARF), a cross-government regulatory framework for crypto-assets. According to a report in The Economic Times, the framework will enable information sharing between countries starting in 2027.
G20 leaders called for speeding up not only the CARF’s implementation but also the related changes to the Common Reporting Standard (CRS). In a statement signed by the summit participants, it’s said that the Organization for Economic Cooperation and Development (OECD) should both coordinate the efforts of all jurisdictions and set a precise schedule for the start of information exchange by the next meeting, which will be held in October this year.
The CARF development and related amendments to the CRS are intended to address the challenges faced by tax authorities in monitoring and taxing profits derived from cryptocurrency trading. The CARF consists of a series of rules that will require crypto service providers, including unregulated crypto exchanges and wallet providers, to:
- implement a procedure to verify and determine the identity of cryptocurrency users;
- report information about their customers to tax authorities;
- provide full reporting on transactions conducted with digital assets.
The CARF initiative was proposed by the OECD in October 2022 and involves the automatic exchange of information on crypto transactions between jurisdictions. Its implementation will reduce the risks of tax fraud and tax evasion by crypto users.
Earlier this year, G20 representatives agreed to develop a global regulatory framework for crypto market regulation.
