47 Nations Commit to Crypto Framework Implementation by 2027

• CARF and DAC8 mark international strides in cryptocurrency taxation.
• Exchange agreements are set to activate by 2027 for seamless data sharing.

In a groundbreaking move, 47 national governments have committed to the swift transposition of the Crypto-Asset Reporting Framework (CARF), an international standard for the automatic exchange of information between tax authorities. The joint pledge, published on November 10, reflects a collective effort to bolster tax compliance and combat tax evasion in the rapidly evolving world of cryptocurrencies.

Developed by the Organization for Economic Cooperation and Development (OECD) and endorsed by the G20 in April 2021, the CARF framework mandates comprehensive reporting on cryptocurrency and digital asset transactions. This reporting encompasses transactions executed through intermediaries or service providers. It offers tax authorities a robust mechanism for tracking and assessing these transactions.

International Collaboration

The CARF implementation process aims to activate exchange agreements for information sharing by 2027. This will facilitate the seamless sharing of financial data among participating nations. It provides a much-needed boost to international tax enforcement efforts.

Notably, the list of pledged countries encompasses various financial jurisdictions. It includes the United Kingdom’s Overseas Territories of the Cayman Islands and Gibraltar. However, it should be highlighted that this pledge is primarily centered in Europe. It also has notable absences from key markets such as China, Hong Kong, the United Arab Emirates, Russia, and Turkey. The absence of African countries and the limited representation of Latin American nations (only Chile and Brazil) are also noteworthy.

It is important to mention that the CARF is not the only international protocol designed to capture cryptocurrency income for tax purposes. In October, the Council of the European Union formally adopted the eighth iteration of the Directive on Administrative Cooperation (DAC8). It is a cryptocurrency tax reporting rule. DAC8 empowers tax authorities within EU member states to monitor. And assess every cryptocurrency transaction conducted by individuals or entities, further strengthening tax compliance measures on the European continent.

As cryptocurrencies continue to gain traction and play an increasingly prominent role in the global economy, the international community’s commitment to implementing comprehensive reporting frameworks such as CARF and DAC8 signals a significant step towards ensuring tax fairness and preventing tax evasion in the digital age.