Crypto Asset Reporting Framework

ID|EN

CARF is a dedicated global tax transparency framework which provides for the automatic exchange of tax information on transactions in Crypto-Assets in a standardised manner with the jurisdictions of residence of taxpayers on an annual basis. CARF was developed by Working Party 10, a working group in the OECD Committee on Fiscal Affairs, which is responsible for developing policies for exchange of information and tax compliance. G20 welcomed the standard as stated in G20 Bali Leaders’ Declaration, 15-16 November 2022. The CARF was published by OECD in June 2023.

The CARF consists of rules and commentary that can be adopted by jurisdiction into its domestic law to gather information from Reporting Crypto-Assets Service Providers with a relevant nexus to the jurisdiction implementing the CARF. The CARF consists of four main aspects:

1. the scope of Crypto-Assets to be covered;
2. the entities and individuals subject to data collection and requirements;
3. the reportable transaction and information; and
4. the due diligence procedure in determining Crypto-Asset users, Controlling Person, and the relevant jurisdiction for exchange purposes.

During the last few years, the crypto-asset market has been growing exponentially. Although the market cap was valued at only around $100 billion in mid-2017, it reached a peak at the end of 2021 of nearly $3,000 billion. While crypto-asset trading has helped in spreading the popularity of the digital economy, crypto-asset features pose some challenges to tax administration to ensure the compliance of taxpayers. For example, cryptography technology enables crypto-assets to be issued, recorded, transferred, and stored in a decentralized manner, without reliance on the traditional intermediaries or central administrators. Hence, it hinders the ability of tax authorities to have full visibility of the effect of the transaction on taxpayers’ tax liability.

In response to these challenges, the G20 took a proactive approach in April 2021 by assigning the Organisation for Economic Co-operation and Development (OECD) the task of developing a framework for the automatic exchange of tax-relevant information on Crypto-Assets. Subsequently, in June 2022, the OECD approved the Crypto-Asset Reporting Framework (CARF), and the official document was published in June 2023.

As the member of Working Party 10, Indonesia has actively participated in the development of the CARF. Indonesia has joined the regular Working Party 10 meeting and has provided feedback during the formulation of the standard.

Indonesia abides by the internationally agreed standards for Exchange of Information (EOI) for tax transparency. It is a member of the Global Forum on Transparency and Exchange of Information for Tax purposes (Global Forum), the multilateral body on the effective implementation of internationally agreed standards for tax transparency.

As part of the commitment to tax transparency, Indonesia, along with other 52 jurisdictions, has committed to work towards commencing automatic exchanges in crypto-assets reporting based on the CARF in 2027.