Nearly 50 governments worldwide have committed to promptly incorporating the Crypto-Asset Reporting Framework (CARF), a new global standard for automated tax information exchange, into their national laws. This commitment was announced on November 10.
The Organisation for Economic Cooperation and Development (OECD) introduced CARF in 2022. Originating from a G20 directive in April 2021, CARF mandates reporting on the nature of cryptocurrency and digital asset transactions, whether conducted through intermediaries or service providers.
The signatories aim to start information exchange agreements by 2027. They believe that the broad, consistent, and timely application of CARF will enhance tax compliance enforcement and combat tax evasion, thereby reducing the financial burden on tax-paying individuals and entities.
The list of countries committing to CARF includes all 38 OECD member states and some well-known financial offshore centers like the Cayman Islands and Gibraltar, territories of the United Kingdom. However, the initiative primarily focuses on Europe and overlooks key markets such as China, Hong Kong, the United Arab Emirates, Russia, and Turkey. Notably, no African nations and only two from Latin America, Chile and Brazil, are part of this pledge. CARF is not the sole international tax information exchange protocol targeting crypto earnings. In October, the European Union Council formally adopted the eighth version of the Directive on Administrative Cooperation (DAC8), a rule for cryptocurrency tax reporting. DAC8 seeks to empower tax authorities to monitor and assess every cryptocurrency transaction made by individuals or businesses within EU member states.
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