OECD Introduces New Tax Standard for Cryptocurrencies and Blockchain Technologies

OECD Introduces New Tax Standard for Cryptocurrencies and Blockchain Technologies

The Organization for Economic Cooperation and Development (OECD) has unveiled a new tax standard specifically aimed at addressing tax evasion related to cryptocurrencies and blockchain technologies. This move comes as the crypto industry receives its own tax framework.

The OECD, an international organization focused on establishing standards across various sectors including taxation, climate change, education, and employment, has introduced the Crypto-Asset Reporting Framework (CARF) alongside amendments to the existing common reporting standard.

CARF aims to tackle potential tax evasion facilitated through the use of cryptocurrencies and blockchain technologies. It complements the existing framework for exchanging tax information among countries.

The new rules also include revisions to the Common Reporting Standard (CRS), which promotes tax transparency concerning foreign financial accounts and was approved in 2014.

Mathias Cormann, Secretary General of the OECD, tweeted that the new international tax transparency standards are designed to strengthen efforts against tax evasion in a digitalized and globalized economy.

The two-part standard recognizes the significant impact of the cryptocurrency industry and its implications for tax revenues in different nations.

CARF comprises three main components: rules for collecting relevant tax information, including the types of assets and entities involved in transactions; the establishment of a new multilateral authority responsible for enforcing these rules; and the use of an electronic format (XML) for information exchange among tax authorities.

The second part of the report introduces amendments to the CRS, notably addressing Central Bank Digital Currencies (CBDCs) and their potential tax compliance requirements. It also introduces the term “Specified Electronic Money Product” to cover digital representations of fiat currencies.

The OECD document outlines key considerations for entities and individuals involved in cryptocurrency usage, emphasizing the need for monitoring and proper taxation. It identifies crucial elements such as wallets, exchanges, distributed ledger technology (DLT), and derivatives based on crypto assets.

While enforcement mechanisms for this tax framework remain uncertain, it is evident that taxation is a priority for regulatory authorities in the cryptocurrency space.