OEDC Introduces Crypto Reporting Framework to Avoid Tax Evasion

The Organisation for Economic Cooperation and Development (OECD) has introduced a crypto tax framework with the aim of increasing the visibility of crypto transactions and the customers involved.

Since the OECD is an intergovernmental organization with 38 countries as members, the released framework is meant to standardize information sharing between member countries. Automatic sharing of crypto-related taxpayer information across different jurisdictions will be normalized.

Once agreed upon, this exchange and reporting of crypto transaction information will be done on a yearly basis. Markedly, the need for the framework was birthed from the spike of unregulated cryptocurrency exchange and wallet providers in the digital assets industry.

“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,” OEDC said

According to OECD, the Crypto-Asset Reporting Framework (CARF) will be presented at the G20 Finance Ministers and Central Bank Governors’ meeting scheduled between October 12-13 which will hold in Washington D.C. Precisely, the G20 requested such a framework from OECD when it seemed like there was a rapid adoption in the use of crypto for several investments and financial transactions.

As per the published OECD statement, “Unlike traditional financial products, crypto-assets can be transferred and held without the intervention of traditional financial intermediaries, such as banks, and without any central administrator having full visibility on either the transactions carried out or on crypto-asset holdings.”

Law Enforcement Agencies Target Crypto Firms

The OECD and G20 believe that due to this feature of crypto assets, it can easily be utilized to evade tax. Eventually, it will sabotage the effort that both entities have put together to ensure tax transparency through the adoption of the OECD/G20 Common Reporting Standard (CRS).

The operations of CARF will involve targeting any digital representation of value that depends on a ‘cryptographically secured distributed ledger or a similar technology to validate and secure transactions.

In addition exchanges and other digital assets service providers are expected to report under the CARF. Notably, regulations to nab tax evaders are being developed worldwide.

Recently, America’s tax regulator Internal Revenue Service (IRS) received authorization to issue a ‘John Doe’ summon to some banks. It was also reported that South Korean law enforcement officials seized cryptocurrencies worth about 260 billion won ($183 million) from residents and businesses in the country over the course of two years.