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Crypto Tax Evasion Comes Under G20 Scrutiny, Framework Developed to Fix Gaps

An international policy group has developed a new framework aimed at improving the transparency of cryptocurrency transactions and their associated tax implications.

The group, the Organisation for Economic Co-operation and Development (OECD), generated the plan at the behest of the G20 Finance Ministers and Central Bank Governors, which met last week in Washington D.C. to discuss the proposal.

As such, the Crypto-Asset Reporting Framework (CARF) is designed to automatically share information with tax jurisdictions similar to the procedure laid out in the G20 Common Reporting Standard (CRS) used to regulate other types of financial transactions, according to the OECD.

“The Common Reporting Standard has been very successful in the fight against international tax evasion. In 2021, over 100 jurisdictions exchanged information on 111 million financial accounts, covering total assets of EUR 11 trillion,” said OECD Secretary-General Mathias Cormann, in a statement. “… the new crypto-asset reporting framework and amendments to the Common Reporting Standard will ensure that the tax transparency architecture remains up-to-date and effective.”

Per the OECD announcement of the new framework, the group is working to address gaps in cryptocurrency transaction reporting and subsequent tax filings. These gaps are the result of the nature of crypto-asset transfers, which do not require the assistance of traditional, regulated financial intermediaries like other financial products.

“The crypto market has also given rise to new intermediaries and service providers, such as crypto-asset exchanges and wallet providers, many of which currently remain unregulated,” notes the international group. “These developments mean that crypto-assets and related transactions are not comprehensively covered by the OECD/G20 Common Reporting Standard, increasing the likelihood of their use for tax evasion while undermining the progress made in tax transparency through the adoption of the CRS,” it adds.

From Twitter | Crypto and Forex News Aggregator @eBargainsToday

"#Portugal #StateBudget Portugal proposes 28% tax on annual crypto trading profits next year: The cryptocurrency tax haven could see taxes levied on profits realized from cryptocurrency trading or… | |"

At the July meeting of the G20 Finance Ministers and Central Bank Governors in Bali, members called on the Financial Stability Board (FSB) to intensify its monitoring of the global financial system and lauded the board’s work ensuring supervision and regulation of crypto assets. The meeting represents a continuation of those goals.

“We support the FSB’s efforts to build public awareness of risks and its public communication that stresses the importance of implementing the principle of ‘same activity, same risk, same regulation,’ in order to strengthen regulatory outcomes and to support a level playing field, while harnessing benefits of innovation,” according to a summary of the July meeting.

Specifically, the newly developed CARF will target all digital representations of value relying on cryptographically secured distributed ledgers, or like technologies, that secure and validate transactions, according to the OECD. Carve-outs for assets already covered by CRS and cannot be used for payments and investing are expected. Then, entities providing crypto exchange services would be obligated to report those transactions under the new framework.

Read the complete framework and other related materials.


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