The UK, alongside a host of nations across the world, have all agreed to implement a new law that would stamp out tax evasions related to cryptocurrency.
An international grouping of the UK, Australia, Brazil, Canada, France, Germany, Japan, the US, and many more, have agreed to use the guidelines outlined in the Crypto-Asset Reporting Framework (CARF) to set out new international standards to ensure tax transparency will not become eroded.
Developed by the OECD, the CARF aims to ‘further improve the ability to ensure tax compliance and clamp down on tax evasion, which reduces public revenues and increases the burden on those paying their taxes’.
The “first of its kind” global commitment is spearheaded by the UK and aims to take effect for exchanges to become compliant with the new guidelines from the start of 2027.
Financial Secretary to the Treasury, Victoria Atkins, said: “I am proud that the UK is once again demonstrating leadership on tackling global tax evasion, helping to secure the revenue that’s essential for the public services we all use.
“Today we are sending out a strong message that we will not allow criminals to use crypto to avoid paying their fair share.”
The decision to implement the CARF follows the 2021 global tax deal agreed at G20 that looks to enforce more stringent laws on tax avoidance and that the right tax is paid to the right place through a 15% global minimum rate.
The new framework to cover cryptocurrencies has been regarded as “essential” to keep up with the evolving nature of the global crypto market, with some indications revealing that tax on non-compliance on crypto assets range as high as 55% to 95%.
The CARF intends to build upon existing tax systems, such as the Common Reporting Standard, which has already recovered almost £100bn in additional tax revenue since its introduction in 2014.
The UK has projected that “hundreds of millions” of pounds will be recovered as part of the CARF’s guidelines to “scope, negotiate and finalise” provisions whilst boosting global support.