The Organisation for Economic Cooperation and Development is next year planning to release a tax-reporting framework for crypto-assets based on the common reporting standard (CRS).
The common reporting standard is the global standard for the automatic exchange of tax information related to financial assets and income.
The OECD aims to ensure tax transparency with respect to crypto assets and the income derived from the sale of these types of assets.
Building on the existing framework for the exchange of financial account information would help ensure consistency between the reporting on traditional financial assets and crypto assets, the OECD said in a report to G20 finance ministers and central bank governors.
The information flows will follow the same architecture as the CRS. This means in practice that the collected information will be reported by intermediaries to local tax authorities, which will then automatically exchange the information with the jurisdictions in which the relevant taxpayers are resident.
Some of the technical issues the OECD still needs to address are which type of virtual assets should be reported and whether, in addition to crypto exchanges, intermediaries like wallet providers should be in the scope of the reporting framework.
It also has to be resolved whether beyond the reporting of sales proceeds, other income derived from crypto assets and information on the value of the holding of crypto assets should be reported, the report noted.
The OECD said it will continue to work on the detailed technical proposals for the new tax-reporting framework for crypto assets and present an implementation package to the G20 in 2021.
Meanwhile, the G20/OECD Inclusive Framework on BEPS adopted a report on ‘Taxing Virtual Currencies’.
The report analyses existing approaches and key policy gaps in 50 jurisdictions, by looking at the definitions, legality and valuation of virtual currencies. It analyses the tax consequences across the different stages of the crypto lifecycle from creation to disposal.
The report also describes the tax treatment of virtual currencies – from the perspective of income, consumption and property taxation – highlighting key taxable events and the different approaches of countries to taxation.
It recommends policymakers should consider designing appropriate guidance on the tax treatment of emerging technologies, such as stablecoins, central bank digital currencies, proof-of-stake and decentralised finance.