With around 50 countries planning to collaborate to compel crypto platforms to disclose information about their clients to tax authorities, it has never been as important as it is now to ensure your crypto tax affairs are in good order.
The OECD has recently introduced a new Crypto-Asset Reporting Framework (CARF). This means that crypto platforms are now obliged to share information with tax authorities about their clients. This obligation is something they’ve managed to avoid until now.
The regulations are set to take effect by 2027 for data exchanges in around 48 countries. This includes prominent ones like the UK, Australia, US, France, Germany, Canada, Japan, Korea, and the Cayman Islands.
The 48 countries that have signed up for CARF all have very active crypto marketplaces. They have stated that they are keen to incorporate CARF into their national laws. Keen to act quickly so as to ensure greater transparency.
The global surge in crypto has led to an increase in tax avoidance. Estimates suggesting non-compliance for cryptoassets could be as high as 55% to 95%.
The aim of this initiative is to provide tax authorities with information from other jurisdictions, ensuring better overall tax compliance.
The UK authorities alone have estimated that they stand to recover hundreds of millions of pounds in lost revenue as a result of CARF. They have agreed on a historic joint statement with the other 48 participating countries. This will help combat individuals who they believe are using crypto to evade billions in taxes.
The CARF will enhance the existing Common Reporting Standard. This system is currently used by tax authorities to exchange information on taxpayers with offshore assets.
With bitcoin having doubled in price in the last year, from around $16,000 to just over $37,000 at the time of writing this article (13th November 2023), it is clear that the crypto bubble is far from burst. Many would have us believe, meaning that getting your crypto tax affairs in good order is more critical than ever.
At ETC Tax, we have been assisting clients with their crypto tax compliance since 2017. We have significant experience in all things crypto. If you would like help with anything crypto-related please do not hesitate to get in touch.
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