As published on: coingeek.com, Wednesday 14 June, 2023.
The Organization for Economic Cooperation and Development (OECD) has published a new taxation framework for the digital currency industry and central bank digital currencies (CBDCs).
The new framework stems from a review of the 2014 Common Reporting Standard (CRS) to plug the loopholes associated with digital currency taxation among member countries. Under the new framework, tax information on digital currency transactions will be automatically exchanged uniformly in line with existing rules.
Dubbed the Crypto-Asset Reporting Framework (CARF), the new tax reporting standard by the OECD received input from tax authorities from G20 nations. The framework comprises three main parts—the first focuses on the scope of assets to be covered, the transactions subject to reporting, and the entities affected by the framework.
The second part places a premium on a “Multilateral Competent Authority Agreement,” while the third proposes an electronic format (XML) for tax authorities to rely on in exchanging CARF details.
“Our new international tax transparency standards cover the updated Common Reporting Standard and the new reporting framework for crypto assets, further strengthening efforts to tackle tax evasion in a digitalised & globalised world economy,” OECD Secretary-General Mathias Cormann said.
Aside from creating a new tax framework, the OECD made amendments to the CRS to cater to the rise of digital currencies. The new amendments focus on bolstering reporting requirements and due diligence procedures and introducing the Non-Reporting Financial Institution category for non-profits.
The amendments also provide for a “Specified Electronic Money Product” to represent digital representations of fiat currencies.
The 131-page rule book is not binding, but OECD member countries may choose to ratify the provisions into their legal systems. Founded in 1961, OECD has 38 nations as members and a global reach spanning over 100 countries.