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The Organization for Economic Cooperation and Development, or OECD, has suggested additional requirements on reporting crypto transactions and identifying users aimed at increasing transparency for global tax authorities.
In a public consultation document released on Tuesday, the OECD opened for public comment a proposal that would require crypto service providers to better identify users and report on certain transactions. The organization said that under current reporting requirements, tax authorities do not have “adequate visibility” for transactions dealing with crypto assets. According to the OECD, the crypto market posed a “significant risk” around tax transparency, claiming that any gains will eventually be lost without additional safeguards.
The proposal suggested individuals and businesses already dealing in crypto services — including exchanges, retail transactions and transferring tokens — have 12 months from the effective date of the rules to comply with the reporting requirements. Members of the public were asked to weigh in on which crypto assets would be covered under the proposal — including non-fungible tokens — as well as on tax reporting rules and “due diligence” procedures related to collecting information from those engaging in crypto transactions for both 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.”
The proposal will be available for public comments until April 29, with a consultation meeting expected at the end of May. The OECD said it aims to report on the amended reporting rules during the G20 Bali summit in October.
Tax season is upon residents of the United States, with many required to submit their returns by April 18. Countries’ tax authorities often have different reporting requirements for HODLing or exchanging crypto assets, with many U.S.-based centralized exchanges sending the Internal Revenue Service paperwork reflecting transactions for the previous year. Taxpayers often report exchanges of tokens or crypto into fiat as capital gains or losses.
(Article Courtesy of Cointelegraph)