The Organization for Economic Co-operation and Development, or OECD, has proposed additional reporting requirements for cryptocurrency transactions and user identification aimed at increasing transparency for global tax authorities.
In a public consultation paper released on Tuesday, the OECD opened for public comment a proposal that would require cryptocurrency service providers to better identify users and report certain transactions. The organization said that under current reporting requirements, tax authorities do not have “adequate visibility” for transactions involving crypto assets. According to the OECD, the cryptocurrency market poses a “significant risk” in regards to tax transparency, arguing that any profits will eventually be lost without further guarantees.
The proposal proposed that individuals and entities already engaged in cryptocurrency services, including exchanges, retail transactions, and token transfers, have 12 months from the effective date of the rules to comply with reporting requirements. Members of the public were asked to weigh what crypto assets would be covered by this offer, including non-fungible tokens, as well as tax reporting rules and “due diligence” procedures associated with collecting information from those involved in crypto transactions for both hot and cold wallets.
“Unlike traditional financial products, cryptoassets can be transferred and held without the intervention of traditional financial intermediaries and without any central administrator having full knowledge of ongoing transactions or holdings of cryptoassets,” the report summary says. “Therefore, crypto assets can be used to undermine existing international tax transparency initiatives.”
The OECD today released a public consultation paper on a new global tax transparency framework for reporting and sharing of information on cryptoassets. https://t.co/1qKFyXWOQb — Amy Lee Rosen (@amyleerosen) March 22, 2022
The proposal will be available for public comment until April 29, with a consultation meeting expected at the end of May. The OECD said it intends to announce the revised reporting rules during the G20 summit in Bali in October.
Related: What you need to know (and be wary of) about the new IRS tax filing for cryptocurrencies
Tax season is for United States residents, and many must file their returns by April 18th. Country tax authorities often have different reporting requirements for HODLing or cryptocurrency asset exchanges, with many centralized exchanges in the US submitting documents to the IRS. reflecting transactions for the previous year. Taxpayers often report exchanging tokens or cryptocurrencies for capital gains or losses in fiat.