The finance minister of India called on G20 countries for bringing the crypto system within a framework known as ‘Automatic Exchange of Information. There are more than 100 countries that have used the framework for adopting the Common Reporting Standards.
Automatic Exchange of Information
Nirmala Sitharaman, the finance minister of India, talked about cryptocurrencies during the Ministerial Symposium on Tax and Development of G20 countries that were being conducted in Bali, Indonesia. She said that the Automatic Exchange of Information framework had come in handy for making significant progress in tax transparency in terms of financial accounts.
She said that their investigations had disclosed that tax evaders often establish different layers of entities in order to hide their unaccounted assets. According to the Indian finance minister, the framework in question provides different jurisdictions with financial account information.
However, she added that tax evaders are quite smart and so, they explore other avenues that can be used for concealing their unaccounted wealth, one of which includes making investments in non-financial assets. The finance minister stated that this was one area that G20 countries should focus on and take action.
Using the framework for crypto
The Indian finance minister said that even though there was a crypto framework in development, it is a good idea for G20 countries to consider the benefits of using the Automatic Exchange of Information framework in this area. She said that the use of the framework for non-financial assets like the ones that are not covered under CRS could be explored.
The purpose of the AEOI is to help bring down global tax evasion. An information standard that it uses is called the Common Reporting Standard (CRS). A request had been made to G20 countries for its development and approval had been granted in July 2014 by the Organization for Economic Cooperation and Development (OECD).
In accordance with the CRS, the jurisdictions are required to ask financial institutions to provide information and exchange that information automatically with other jurisdictions annually.
The use of CRS
Sitharaman said that more than 100 countries are complying with the Common Reporting Standards and are willing to exchange financial account information. But, she highlighted that there were still some countries that have not begun to exchange information under CSR.
She said that they would have to bring these jurisdictions in and the G20 countries need to focus on this. She added that the G20 countries could act as a catalyst in giving these jurisdictions the encouragement they need for becoming part of the AEOI. According to her, making this effort could come in handy for preventing tax avoidance and evasion.
Since cryptocurrencies are being widely used for concealing wealth, bringing them into the framework could also be helpful in minimizing the risk of tax evasion and other crimes.
The regulation of cryptocurrencies has become a prominent topic nowadays, particularly after the turmoil in the crypto market that saw its value plunge significantly since the beginning of the year.