The crypto industry is getting its very own tax framework.
The Organization for Economic Cooperation and Development (OECD) has rolled out a new tax standard for cryptocurrencies along with a set of amendments to the already existing common reporting standard.
The OECD is an international organization aimed at creating standards for issues such as climate change, taxation, education, and jobs. Although none of these standards are compulsory, they act as guidelines for regulators on domestic and international policies.
A framework for exchanging tax information among countries already exists, but the Crypto-Asset Reporting Framework (CARF) is aimed specifically at cryptocurrencies.
Specifically, it looks to reduce the evasion that might be done through these technologies.
The new set of rules also makes changes to the Common Reporting Standard (CRS) which was designed to promote tax transparency with respect to financial accounts held abroad. The CRS was approved in 2014.
“Our new international tax transparency standards aim to further strengthening efforts to tackle tax evasion in a digitalized & globalized world economy,” tweeted Mathias Cormann, Secretary General of the OECD on Thursday.
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.
➡️ https://t.co/GMcvZOQXCc pic.twitter.com/8Z595Vutrn
— Mathias Cormann (@MathiasCormann) June 8, 2023
Beginning with cryptocurrency, the two-part standard recognizes the impact this nascent industry is having and how it will affect tax revenue in different nations.
CARF has three main components: Rules for collecting relevant tax information such as the scope of assets and entities transacting them; a new multilateral authority for enforcing these rules; and an electronic format (XML) for exchanging information among authorities.
The second part of the report showcases amendments to the CRS. Interestingly, it includes a section on Central Bank Digital Currencies (CBDCs), which may have tax compliance requirements. It also adds the term “Specified Electronic Money Product,” which covers digital representations of a fiat currency.
The OECD highlights key points for entities and individuals that are using cryptocurrency today and how they need to be monitored and properly taxed. It correctly identifies certain elements such as wallets and exchanges, distributed ledger technology (DLT), and derivatives based on crypto assets.
Although it is difficult to imagine how they will enforce this framework, aside from death, one thing is for certain: they want to tax you.
