OECD Holds Consultation on New Crypto-Asset Reporting Tax Transparency Rules

published: 31.03.2022

On March 22, the OECD published a public consultation document “Crypto-Asset Reporting Framework and Amendments to the Common Reporting Standard”, which elaborates on a new global tax transparency framework to provide for the reporting and exchange of information with respect to crypto-assets, as well as proposed amendments to the Common Reporting Standard (CRS) for the automatic exchange of financial account information between countries.

Background

Unlike traditional financial products, crypto-assets can be transferred and held without the intervention of financial intermediaries or any central administrator. Therefore, these assets could be exploited to undermine existing international tax transparency initiatives, such as the CRS.

Taking this into consideration, the G20 has asked the OECD to develop a framework for the automatic exchange of information on crypto-assets. The new framework provides for the collection and exchange of tax-relevant information between tax administrations, with respect to persons engaging in certain transactions in crypto-assets. It covers crypto-assets that can be held and transferred in a decentralised manner, without the intervention of traditional financial intermediaries.

Individuals and entities that provide services to exchange crypto-assets against other crypto-assets or fiat currencies must apply the due diligence procedures to identify their customers and report the aggregate values of the exchanges and transfers for such customers annually.

Purposes of the Proposal

1) Alongside the Crypto-Asset Reporting Framework (CARF), the proposal serves as part of the first comprehensive review of the CRS, with the aim of its further improval.

2) The proposal extends the scope of the CRS to cover electronic money products and Central Bank Digital Currencies. It is also necessary to cover indirect investments in crypto-assets through Investment Entities and derivatives.

3) New provisions stipulate for the interaction between the CRS and the CARF, in particular to limit instances of duplicative reporting.

4) The amended CRS seeks to improve the due diligence procedures and reporting outcomes, increasing the usability of CRS information for tax administrations and limiting burdens on financial institutions.

Structure of the Proposal and Rules Offered By It

Interested parties are welcome to comment and make their suggestions on the following:

– obligations of reporting crypto-asset service providers;

– reporting requirements;

– due diligence procedures for individual crypto-asset users and entity crypto-asset users;

– determination of the obligation to report for controlling persons of liable entities;

– requirements for validity of self-certifications;

– definition of crypto-related terms: Crypto-Asset; Relevant Crypto-Asset; Crypto-Asset User; Reportable User, etc.

Next Steps

The OECD is now seeking public comments on the above proposals. Interested parties are invited to send their comments till April 29, 2022. A public consultation meeting will be held at the end of May 2022.

The OECD is expected to report on the results of developing CARF and amending CRS at the G20’s meeting in October 2022.

 

Sources:

OECD’s Announcement

Text of the public consultation document

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