Cryptocurrencies and tax evasion: the United Kingdom promotes an unprecedented global initiative to combat it

He British government reported this Friday that it is leading an unprecedented global commitment to combat tax evasion of cryptocurrencies abroad.

In that sense, the British Treasury Secretary, Victoria Atkinspraised international cooperation to close the gap in the global tax system and potentially recover hundreds of millions of pounds in lost revenue.

This historic agreement follows the leadership of the United Kingdom in the 2021 global tax agreement of the G20 and the Organization for Economic Cooperation and Development (OECD)which combats the tax evasion corporate and ensures that the right taxes are paid to the right place.

The role of the OECD in combating cryptocurrency tax evasion

He Crypto Asset Reporting Framework (CARF)the latest flagship tax transparency standard of the OECD, will require crypto platforms to start sharing taxpayer information with tax authoritieswhich they currently do not do, ensuring that these authorities can exchange information to enforce tax compliance.

It is expected that the CARF comes into effect in time for exchanges with other countries to begin from 2027.

This milestone follows the 2021 global two-pillar tax agreement, which seeks to ensure that companies pay the correct taxes where they operate and combat tax evasion by large multinational companies through a global minimum rate of 15%.

“I am proud that the UK is showing leadership again in the fight against tax evasion globally, helping to secure essential revenue for the public services we all use. “Today we are sending a strong message that we will not allow criminals to use crypto to avoid paying their fair share,” Atkins said in a statement.

The CARF will build on the existing system that tax authorities use to share information with each other, called Common Reporting Standard. This has already had enormous success in the fight against tax evasion overseas, recovering almost £100bn in additional tax revenue from traditional financial assets since its inception in 2014.

The new framework announced today will be essential to counter the rising level of tax evasion caused by the rapid growth of global crypto marketwith some estimates suggesting that tax non-compliance in crypto-asset holdings could range between 55% and 95%.