South Korea has become a member of a group of 48 nations urging for the establishment of a global framework for reporting cryptocurrency. In a significant move, South Korea confirmed its commitment on Friday to implement the international reporting framework for digital assets, known as the Crypto-Asset Reporting Framework (CARF).
The CARF was introduced in August 2022 after receiving approval from the Organization for Economic Cooperation and Development (OECD). This framework aims to facilitate the automatic exchange of tax information related to crypto assets in a standardized manner. It emphasizes the significance of addressing tax implications and combating the lack of transparency associated with this emerging class of assets.
A coalition of 20 countries has expressed their support for promoting this framework and set a target year of 2027 for its implementation. In a joint statement released on Friday, the consortium of countries called for timely tax compliance and the prevention of tax evasion.
“As jurisdictions that host active crypto markets, we intend to work towards implementing the CARF into domestic law and establishing exchange agreements by 2027, subject to national legislative procedures,” the statement read.
A total of 48 countries have encouraged other jurisdictions to join this initiative, with the aim of strengthening “the global system of automatic information exchange that leaves no room for tax evasion.”
To ensure consistency and smooth implementation, signatory jurisdictions will implement any future amendments to the CARF as agreed upon by the OECD. These amendments will be implemented within the designated timeline and will be subject to the respective national legislative procedures.
Earlier in March 2022, the OECD published a public consultation document outlining a global tax transparency framework for reporting on crypto assets. Additionally, it suggested amendments to the common reporting standard, which involves the automatic exchange of financial account information between countries.
Alfredo Collosa, a consultant in tax administration at the Inter-American Center of Tax Administrations, praised the initiative, stating, “It is a good initiative to implement an international exchange regime for transactions involving crypto assets.” He also highlighted that failing to implement such a framework would lead to increased complexity and costs for crypto asset service providers and taxpayers.
