UK Takes Decisive Action Against Global Crypto Tax Evasion

Lion Herald Newsletter | Issue #18 - Friday/ November 10, 2023 | Lincoln, UK

November 10, 2023

Good Evening!

Today, on November 10, 2023, a joint statement was issued, marking the world's first concerted move against offshore crypto tax evasion. A historic effort by 48 nations to combat crypto-enabled tax evasion.

This collaborative endeavor aims to bridge significant gaps in the global tax system and potentially recover billions in lost revenue.

This initiative follows the UK's pivotal leadership in the 2021 G20/OECD global tax deal, emphasizing the commitment to thwart corporate tax avoidance and ensure equitable tax payments in the appropriate jurisdictions.

At the forefront of this global commitment is the Crypto-Asset Reporting Framework (CARF), a groundbreaking tax transparency standard initiated by the UK.

Under the CARF, crypto platforms will be mandated to share taxpayer information with tax authorities, a practice currently absent in the rapidly expanding crypto landscape.

Anticipated to take effect by 2027 for international exchanges, this framework aims to enhance information exchange, facilitating more effective tax enforcement.

Financial Secretary to the Treasury, Victoria Atkins, expressed pride in the UK's leadership role, emphasizing the critical importance of securing revenue for essential public services.

Atkins asserted, "Today, we are sending out a strong message that we will not allow criminals to use crypto to avoid paying their fair share."

Strategic Implementation and Rationale

The CARF builds upon the success of the Common Reporting Standard, in use since 2014, which has already led to the recovery of almost £100 billion in additional tax revenue from traditional financial assets.

With the global crypto market witnessing rapid expansion, estimates suggest that tax non-compliance in crypto-asset holdings could range from 55% to a staggering 95%.

The UK, positioned to potentially recoup hundreds of millions through CARF, leverages its position as a global leader in tax transparency to drive international cooperation.

The OECD-endorsed CARF has received support from the 'Global Forum on Transparency and Exchange of Information for Tax Purposes,' comprising 168 countries convened under the auspices of the OECD.

The G7 has also backed this framework. The joint statement aims to reinforce the mandate of the Global Forum, providing early momentum to support its work in combating global crypto tax evasion.

As the world takes a historic step in addressing the challenges posed by crypto tax evasion, the UK's leadership underscores a commitment to global financial integrity and a fair tax landscape.

The implementation of the CARF marks a significant stride toward ensuring that the right taxes are paid in the right places, closing avenues for illicit financial activities in the ever-evolving world of cryptocurrencies.

Fabrice Iranzi, Editor in Chief / Lion Herald

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Thanks for joining us in this edition of the Lion Herald Newsletter. We hope you've found inspiration and valuable insights to fuel your tech and innovation journey. Remember, every idea counts, and together, we can turn them into real-world solutions. Stay curious, stay innovative, and stay tuned for more exciting stories in our next issue!

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