South Korea Joins Global Community for Crypto Asset Reporting Framework Push
South Korea has joined a group of 48 nations, calling for the promotion of an international framework for cryptocurrency reporting.
In a significant move, South Korea confirmed its engagement on Friday to implement the international reporting framework on digital assets. The Crypto-Asset Reporting Framework (CARF) debuted in August 2022, following approval from the Organization for Economic Cooperation and Development (OECD).
The framework is designed to provide automatic exchange of tax information on transactions in crypto assets in a standardized manner. The framework stressed the importance of tax implications and ways to erode non-transparency posed by this nascent asset class.
A group of 20 countries have expressed support for promoting the framework, setting 2027 as the target year for implementation.
The consortium of countries released a joint statement on Friday, calling for timely tax compliance and preventing tax evasion.
“As jurisdictions that play host to active crypto markets, we therefore intend to work towards swiftly transposing the CARF into domestic law and activating exchange agreements in time for exchanges to commence by 2027, subject to national legislative procedures as applicable.”
A total of 48 countries have encouraged more jurisdictions to join the scheme. This would enhance “the global system of automatic information exchange which leaves no hiding places for tax evasion.”
Additionally, to ensure consistency and smooth implementation, signatory jurisdictions would implement amendments to this standard as agreed by the OECD. The amendments will be implemented in line with the above timeline and subject to national legislative procedures as applicable.
Global Cryptoasset Reporting Rule – A Positive Step
The OECD first published a public consultation document in March 2022 on a global tax transparency framework for cryptoassets reporting. It also proposed amendments to the common reporting standard for the automatic exchange of information on financial accounts between countries.
Alfredo Collosa, a consultant in tax administration at the Inter-American Center of Tax Administrations, calls this a “good initiative”.
“It is a good initiative to implement an international exchange regime for transactions involving cryptoassets.”
Failure to implement this would create complexity for cryptoasset service providers and taxpayers, increasing their tax compliance costs, he added.