48 countries commit to implement CARF: attitudes of all parties and future crypto tax transparency framework
Written by: TaxDAO
On November 10, 48 countries, including major countries such as the United States, Canada, Germany, and Japan, pledged to combat tax evasion through the Crypto Asset Reporting Framework (CARF), which they plan to implement by 2027. To achieve global implementation by 2027, this requires strong support from all stakeholders.
Short-term impact of CARF commitment
CARF was established in response to the tax challenges brought about by the rapid development of the crypto asset market and the attention of various countries to crypto asset tax cooperation.cryptocurrencyexchangeAutomatic exchange of information between tax authorities provides the basis for joint efforts by contracting states to strengthen tax compliance and curb tax evasion in the rapidly growing crypto market.
CARF 通过合作和信息交流来解决与加密货币相关的逃税问题，是保持金融透明度和打击全球逃税的重要一步。关于 CARF 实施的相关细节问题，各国在 2023 年 11 月 29 日至 12 月 1 日在葡萄牙里斯本举行的全球论坛第 16 次全体会议上进一步讨论了这些问题：为响应 G20 在 2022 年广泛实施加密资产报告框架（CARF）和相关国家对修订 AEOI 标准的呼吁，全球论坛成立了一个新的自愿团体——CARF 团体。考虑到 EOIR 和 AEOI 标准的日益成熟，全球论坛还同意调整其同行评审和监测流程，以提高在未来为论坛成员提供服务的能力。
It is worth noting that the list of participating countries includes the OECDXiaobai NavigationCARF has expanded to all 38 member countries and traditional offshore financial havens such as the British overseas territories of the Cayman Islands and Gibraltar. However, the absence of major markets such as China, Hong Kong, the United Arab Emirates, Russia, Turkey and India, the non-participation of almost all African countries (except South Africa), and the participation of only two Latin American countries (Chile and Brazil) have weakened the global impact of CARF. There is still a long way to go to establish a global crypto asset tax transparency framework in the future.
Attitudes of relevant parties
The countries that have committed to implement CARF this time do not hold the same attitude. The United Kingdom, a long-established financial power, has a high opinion of CARF. The UK Treasury has previously estimated that crypto tax evasion may be as high as 55%-95%, and believes that participating in CARF provides a good international environment for reasonable regulation of crypto taxation. However, third world countries have mixed attitudes towards CARF. In terms of supporters, the Minister of Finance of Chile said that CARF will help maintain the ever-improving global fiscal transparency. Its audit-related person in charge said that this automatic information exchange speeds up the audit process and improves audit efficiency, and proposed the need to properly handle and protect financial consumer data. South Africa is the only African country to join CARF. The relevant person in charge said that signing the agreement will help South Africa keep up with the rapid development of the crypto asset market.
Some countries have not reached a consensus on the implementation of CARF. For example, Brazil is a signatory country, but the Brazilian Congress has recently launched a number of debates on CARF. Opponents believe that the implementation of CARF will reduce the efficiency of tax litigation and greatly increase related administrative costs.
The implementation of CARF demonstrates the government's intention to obtain information and expand control over the movement of crypto assets. However, the attitudes of various countries towards CARF reflect the different views of various countries. Some comments pointed out that the rules of CARF should be translated into domestic tax legislation. In order to adapt to CARF, the tax compliance procedures of many companies in the future will need to be adjusted, and operating costs may temporarily increase because meeting these standards will bring new requirements, and these costs may be passed on to suppliers and charged to consumers.
CARF 的实施也将对交易所与交易者产生相关影响。对于交易所，CARF 要求交易所报告加密货币交易。另一方面，在牛市，数以百亿计的美元从传统金融体系流入加密货币交易所和平台，传统金融机构想阻止资本向加密货币平台的外逃趋势——部分银行在 2021 年开始提供自己的内部加密货币交易服务，恰巧传统金融机构并不需要遵守该框架中的 CARF 标准。
Requiring exchanges and platforms to track cryptocurrency transactions also further illustrates the impact that CARF could have on the development of centralized cryptocurrency exchanges and platforms, which could benefit decentralized alternatives such as Dex.
CARF will also have an impact on traders, and its impact on exchanges will be transmitted to end traders. That is, the cryptocurrency transactions reported by exchanges will become information for taxation in various countries, thereby having tax implications for end cryptocurrency traders.
The future of crypto tax transparency framework
While CARF represents an important international effort to standardize crypto taxation, it is not the only agreement, and other international agreements on the exchange of tax information involving cryptocurrencies are also advancing.
In October this year, the European Council formally adopted DAC8. DAC8 is a cryptocurrency tax reporting rule that gives tax collectors jurisdiction to monitor and evaluate every cryptocurrency transaction in any EU member state. CoinBase's analysis pointed out that DAC8's crypto legal provisions are a supplement to the anti-money laundering rules under the MiCA framework. DAC8 requires all crypto asset service providers located in the EU to report transactions of EU customers to provide support for anti-money laundering and anti-tax evasion. In addition to restricting crypto assets, DAC8 also applies to financial institutions that issue central bank digital currencies (CBDCs).
As international regulatory frameworks, CARF and DAC8 will not take effect naturally, but require member states to formulate domestic laws to implement them. Based on past experience, DAC8 within the EU will be implemented soon, but the full implementation of CARF will still take some time. The convergence of CARF and DAC8 reflects the efforts made on crypto tax regulation around the world.
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