OECD has suggested additional requirements for reporting crypto transactions and identifying users to increase transparency for global tax authorities.
In a public consultation document released on Tuesday, the OECD called for comments on a proposal that would require crypto service providers to identify users and report on certain transactions. According to the organization, tax authorities do not have “adequate visibility” into transactions dealing with crypto assets. According to the OECD, crypto has a “significant risk” associated with tax transparency, stating that any gains would eventually be lost without additional safeguards.
Individuals and businesses that deal in crypto services, including exchanges, retail transactions, and transferring tokens, have up to 12 months from the effective date of the rules to comply with the reporting requirements. The public was asked to weigh in on which crypto assets would be covered under this proposal – including nonfungible tokens – as well as on tax reporting rules and the “due diligence” procedures to be used when collecting information from those engaging in crypto transactions, both for hot and cold wallets.
“Unlike traditional financial products, crypto-assets can be transferred and held without the intervention of traditional financial intermediaries and without any central administrator having full visibility on either the transactions carried out, or crypto-asset holdings,” said a summary of the report. “Therefore, crypto-assets could be exploited to undermine existing international tax transparency initiatives.”
Today the OECD released a public consultation document concerning a new global tax transparency framework to provide for the reporting and exchange of information with respect to crypto-assets. https://t.co/1qKFyXWOQb
— Amy Lee Rosen (@amyleerosen) March 22, 2022
The proposal will be available for public comment until April 29, and a consultation meeting is expected in May. At the G20 summit in Bali in October, the OECD plans to report on the amended reporting rules.
Residents of the United States are now facing tax season, with many required to file by April 18. Most countries’ tax authorities have different requirements for HODLing or exchanging crypto assets, with many U.S.-based centralized exchanges sending the Internal Revenue Service paperwork outlining transactions for the previous year. Taxpayers often report exchanges of tokens or crypto into fiat as capital gains or losses.