[NEWS] 48 OECD member countries, including Japan, sign international agreement to combat cryptocurrency tax evasion

On the 10th, the OECD (Organization for Economic Cooperation and Development) announced that it will adopt CARF (Cryptocurrency Reporting Framework) by 2027 as a measure against tax evasion using crypto assets (virtual currencies). Member countries including Japan have signed the agreement, and the UK government will implement CARF.

In addition to Japan, 48 countries, including the United States, Armenia, Australia, Belgium, Canada, Bulgaria, and South Korea, have signed the joint statement.

The announcement emphasized that "we will keep pace with the rapid development and growth of the cryptocurrency market" and stated that "we welcome the new international standard on automatic exchange of information between tax authorities established by the OECD so that the improvement of global tax transparency is not undermined."

It also emphasized that the widespread and timely implementation of CARF will lead to improved tax compliance and the ability to crack down on tax evasion. In the future, CARF will be quickly applied to domestic law, subject to applicable domestic legislative procedures, and an agreement will be concluded in time for the start of information exchange by 2027.

CARF includes due diligence to identify the scope of crypto assets covered, data collection, entities and individuals subject to reporting obligations, and crypto asset transactions and crypto asset holders subject to reporting. It also includes "determination of tax residence" for the purpose of reporting and exchange.

This means that when trading at an overseas crypto asset exchange that is a member of the OECD, the information will be shared with the regulatory authorities of the country of residence. For example, when a resident of Japan trades at an overseas crypto asset exchange in a CECD member country, the information will be shared with the National Tax Agency, etc.

OECD Secretary-General Mathias Cormann commented in the announcement, "Today's announcement is a major step forward in international cooperation on crypto assets." In addition, he stated his intention to respond promptly to the implementation of CARF and the realization of international information sharing in the future.

Since the legal and operational guidelines for CARF were decided in June this year, the Global Forum has established a dedicated team to advance the work. The issue of cryptocurrency tax evasion is scheduled to be discussed at the Global Forum general meeting to be held in Lisbon, Portugal from the 29th of this month to the 1st of next month.

Challenges in tracing transactions between individuals

Issues and countermeasures regarding cryptocurrency tax evasion are always at the center of discussion in various countries. Some of these are said to be related to money laundering and terrorist financing, and it can be said that immediate measures are essential.

On the other hand, there are some parts that are difficult to trace when taking measures. In fact, in some countries and regions, local money exchangers and others act as intermediaries in OTC transactions, and there is also a movement to use mixing services that were uncovered in the United States. When such transactions are made, the reality is that it becomes difficult to trace them.

However, imposing strict legal penalties and exchanging information internationally could have a certain effect and deterrent effect. Some countries, such as China, Russia, and India, have not signed this joint statement.

Reference:UK announcement,OECD announcement
Image: Shutterstock

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