G-20 Leaders Call for Swift Implementation of Crypto Asset Reporting Framework
The leaders of the G-20 nations have unanimously agreed to implement a reporting framework for crypto assets in a swift manner. This decision comes as a response to the growing concern among member nations regarding the use of non-financial assets, such as cryptocurrencies, for tax evasion purposes. The proposed Crypto Asset Reporting Framework (CARF) aims to ensure that these assets are not misused to conceal unaccounted wealth.
The G-20 Leaders’ declaration states, “We call for the swift implementation of the CryptoAsset Reporting Framework (‘CARF’) and amendments to the CRS. We ask the Global Forum on Transparency and Exchange of Information for Tax Purposes to identify an appropriate and coordinated timeline to commence exchanges by relevant jurisdictions.”
Additionally, the leaders have reaffirmed their commitment to fostering cooperation for the establishment of a fair, sustainable, and modern international tax system that meets the demands of the 21st century. Notable progress has been achieved in advancing Pillar One, which includes the development of a Multilateral Convention (MLC) and work on Amount B, a framework for simplified application of the arm’s length principle to in-country marketing and distribution activities. Furthermore, the completion of the Subject to Tax Rule (STTR) under Pillar Two has also been accomplished.
Finance Minister Nirmala Sitharaman briefed reporters after the summit, highlighting significant progress made by the G-20 countries in working towards a comprehensive two-pillar solution. Sitharaman emphasized the exchange of information on immovable property transactions between countries and the launch of a pilot program for tax and financial crime investigation in collaboration with the OECD. These developments have been instrumental in accelerating the implementation of the global tax deal.
Under the global tax overhaul, approximately 140 countries, including India, have reached an agreement to revamp global tax norms, ensuring that multinational corporations pay taxes in the locations where they operate, with a minimum tax rate of 15%. However, certain unresolved issues still need to be addressed before the implementation of this agreement can be finalized.
The G-20 countries have called on the OECD to establish an inclusive framework to swiftly resolve pending issues related to the Multilateral Convention (MLC). The aim is to prepare the MLC for signature in the second half of 2023 and conclude the work on Amount B by the end of 2023.
Expressing support for the efforts made by various countries in implementing the Global Anti-Base Erosion (GloBE) Rules, the G-20 countries recognize the need for coordinated efforts to effectively implement the two-pillar international tax package. Additionally, they welcome plans for providing further support and technical assistance to developing nations.
In their discussions, the G-20 countries also acknowledged two important reports from the OECD: ‘Enhancing International Tax Transparency on Real Estate’ and ‘Global Forum Report on Facilitating the Use of Tax-Treaty-Exchanged Information for Non-Tax Purposes’.
The OECD report on international tax transparency proposes the automatic exchange of information on real estate assets among countries, along with the establishment of digitized ownership registers accessible to government agencies in real-time. This initiative safeguards against the misuse of foreign real estate investments for concealing undeclared assets. The report highlights a significant increase in foreign-owned real estate assets over the past decade, with a considerable shift in funds from financial assets to foreign real assets.
Furthermore, the Global Forum report calls for a comprehensive approach involving collaboration between tax authorities and non-tax agencies, such as financial intelligence units, anti-corruption agencies, customs authorities, and public prosecutors. This approach aims to tackle the challenge of illicit financial flows by facilitating the sharing of information.
India has been advocating for the expansion of the common reporting standard (CRS) at the G-20, urging the inclusion of non-financial assets like real estate properties in the automatic exchange of information (AEOI) among OECD countries.
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