On 10 November 2023, the Inland Revenue Authority of Singapore (“IRAS“) announced that Singapore, alongside 47 other jurisdictions, was committing to implementing the Crypto-Asset Reporting Framework (“CARF“) developed by the Organisation for Economic Cooperation and Development (“OECD“).
By way of background, the emergence of crypto-assets has reduced tax administrations’ visibility on tax-relevant activities, as crypto-assets can be transferred and held without interacting with traditional financial intermediaries and without any central administrator having full visibility of the transactions. This diminishes tax administrations’ ability to verify whether tax liabilities are appropriately reported and assessed, and risks the erosion of recent gains in global tax transparency.
Published in June 2023, the CARF aims to address this issue by providing for the automatic exchange of tax relevant-information on crypto-assets and addressing the rapid growth of the crypto-asset market. It consists of three components:
(a) Rules and related Commentary that can be transposed into domestic law to collect information from Reporting Crypto-Asset Service Providers (“Reporting CASPs“) with a relevant nexus to the jurisdiction implementing the CARF;
(b) a Multilateral Competent Authority Agreement on Automatic Exchange of Information, and related commentary; and
(c) an electronic format (XML schema) to be used by Competent Authorities for purposes of exchanging CARF information, as well as by Reporting CASPs to report CARF information to tax administrations (as permitted by domestic law).
In committing to implementing the CARF, Singapore will work towards swiftly transposing the CARF into domestic law and activating exchange agreements in time for exchanges to commence by 2027.
Amendments to Common Reporting Standard
Alongside implementing the CARF, Singapore has also committed to implementing the amendments to the Common Reporting Standard (“CRS“) as agreed by the OECD. Adopted in 2014, the CRS was designed to promote tax transparency with respect to financial accounts held abroad. The amendments are to:
(a) bring certain electronic money products and central bank digital currencies in scope;
(b) ensure that indirect investments in crypto-assets through derivatives and investment vehicles are now covered by the CRS; and
(c) strengthen the due diligence and reporting requirements and to provide a carve-out for genuine non-profit organisations.
IRAS will work with the industry to provide guidance for CARF implementation in Singapore.
Click on the following links for more information:
- IRAS Media Release titled “Singapore commits to implement the Crypto Asset Reporting Framework” (available on the IRAS website at www.iras.gov.sg)
- International Standards for Automatic Exchange of Information in Tax Matters (available on the OECD website at www.oecd.org)
