G20 leaders have taken significant steps toward the establishment of a Crypto Asset Reporting Framework (CARF), as reported by The Times of India on September 9. Under this framework, member countries of the G20 would collaborate in collecting and sharing information regarding the use of cryptocurrencies and digital assets, with the aim of preventing tax evasion. In a joint statement, the leaders strongly emphasized the need for swift implementation of CARF and amendments to the common reporting standard (CRS).
The same statement also called upon the Global Forum on Transparency and Exchange of Information for Tax Purposes to outline a timeline for the initiation of the information exchange program. The countries involved are targeting a launch of the program by 2027, although specific details and next steps toward creating a comprehensive framework were not provided in The Times of India’s report. However, India’s Union Finance Minister, Nirmala Sitharaman, indicated that the International Monetary Fund (IMF) and the Financial Stability Board (FSB) will play a crucial role in defining the “contours” of the proposed framework, as detailed in a separate report by Livemint.
While the G20 leaders’ pronouncement mainly centers on cryptocurrency reporting, the group intends to bring about broader tax reporting reforms. The common reporting standard (CRS) is expected to encompass non-financial assets, including real estate. This exemplifies the group’s commitment to enhancing transparency and combating tax evasion on a global scale.
Additionally, approximately 140 countries, including India, are striving to establish an international, two-pillar tax program. Its objective is to ensure that multinational companies are obligated to pay minimum taxes, although this particular program has yet to be put into practice. This initiative underscores the G20’s endeavor to foster equitable taxation and prevent profit shifting.
Another key aspect highlighted in the G20 leaders’ recent paper, published on September 7, is the regulation of stablecoins. The report acknowledges the potential volatility and risks to financial stability posed by stablecoins, thereby signaling the necessity for implementing appropriate regulatory measures. The G20 seeks to establish a governing body specifically dedicated to overseeing stablecoins.
India’s prominent role in these latest developments is primarily attributed to its hosting of the 2023 G20 summit in its capital city, New Delhi. This significant responsibility places India at the forefront of shaping the G20’s agenda and initiatives related to crypto assets, tax reform, and stablecoin regulation.
G20 leaders are demonstrating their determination to tackle tax evasion and promote financial stability through the proposed Crypto Asset Reporting Framework. While specific details and next steps are yet to be outlined, the swift implementation of CARF and amendments to the common reporting standard are considered paramount. As the world prepares for the 2023 G20 summit in India, the international community awaits further guidance from the International Monetary Fund, Financial Stability Board, and other global regulatory bodies in shaping the contours of this anticipated framework.