Syllabus
Context: Recently, India pushed to widen the scope of the common reporting standard (CRS) in the existing OECD’s Automatic Exchange of Information (AEOI) framework.
About the Automatic Exchange of Information (AEOI) framework:-
- It provides for the automatic exchange of a predefined set of information between tax authorities.
- The AEOI Standard requires the annual exchange of information on financial accounts held by non-resident individuals and entities in a pre-defined format.
- The information exchanged includes details about the financial account and details about the account holder.
- Under the AEOI framework, signatory countries follow a CRS and obtain information from their financial institutions and automatically exchange that information with other jurisdictions on an annual basis.
- The AEOI Standard provides a powerful tool to help deter and identify offshore tax evasion through holding financial assets abroad.
- Indian Scenario: India currently has AEOI with 108 jurisdictions for receiving financial information and with 79 jurisdictions for sending information automatically.
- In August 2022, the OECD also approved the Crypto-Asset Reporting Framework (CARF).
About Crypto-Asset Reporting Framework (CARF):-
- It provides for the reporting of tax information on transactions in crypto assets (UPSC Prelims: Understanding Cryptocurrency) in a standardised manner, with a view to automatically exchanging such information.
- The CARF aims to ensure the collection and automated exchange of information on crypto assets with jurisdictions of taxpayers’ residences every year in a standardized manner.
- The framework defines crypto assets as any assets that are held and transferred in a decentralized manner, without the involvement of traditional financial intermediaries.
- These assets are issued in the form of crypto derivatives, stablecoins, or certain non-fungible tokens.
- This definition does not include entities that use cryptography only to keep records and does not have ownership rights.
- It also does not include Central Bank Digital Currency, which has separate reporting requirements.
- Intermediaries and other service providers enabling the exchange and transfer of crypto-assets(UPSC CSE: Crypto Asset Regulation ) like brokers and ATM operators are included within the scope of this framework.
- CARF also outlines the data that needs to be reported and the due diligence to be conducted by crypto-asset users.
- The framework mandates that the crypto asset firms must report to the country in which they operate.
- They must report about exchanges between relevant crypto assets and fiat currencies, and the exchanges between one or more types of crypto assets as well as other transfers of crypto, including retail payment transactions.
- The framework requires individual and entity customers and persons to identify themselves.
MUST READ: Cryptojacking
SOURCE: THE INDIAN EXPRESS
PREVIOUS YEAR QUESTIONS
Q.1) With reference to Non-Fungible Tokens (NFTs), consider the following statements: (2022)
- They enable the digital representation of physical assets.
- They are unique cryptographic tokens that exist on a blockchain.
- They can be traded or exchanged at equivalency and therefore can be used as a medium transaction. of commercial
Which of the statements given above is correct?
- 1 and 2 only
- 2 and 3 only
- 1 and 3 only
- 1, 2 and 3
Q.2) With reference to ‘Bitcoins’, sometimes seen in the news, which of the following statements is/are correct? (2016)
- Bitcoins are tracked by the Central Banks of the countries.
- Anyone with a Bitcoin address can send and receive Bitcoins from anyone else with a Bitcoin address.
- Online payments can be sent without either side knowing the identity of the other.
Select the correct answer using the code given below.
- 1 and 2 only
- 2 and 3 only
- 3 only
- 1, 2 and 3