Cooperation internationally on crypto-assets ensures equal taxation, the avoidance of tax evasion, and the bringing of the necessary resources to the state budget, among other benefits, the Ministry of Finance says.
The ministry noted this as Estonia signs up to a joint statement aimed better information exchange on crypto-assets.
Crypto-assets have become a noteworthy component of the global financial market, the finance ministry says, hence why jurisdictions, including some EU Member States, have opted to extend automatic exchange of information to crypto-assets also.
If a cooperation network is to function effectively, however, it is essential that as many jurisdictions globally sign up, to facilitate an extensive exchange of information, the ministry says.
In this way, fair taxation in the field of crypto-assets can also be ensured, it is argued.
The collective engagement to implement the crypto-asset reporting framework joint statement follows:
To keep pace with the rapid development and growth of the crypto-asset market and to ensure that recent gains in global tax transparency will not be gradually eroded, we welcome the new international standard on automatic exchange of information between tax authorities developed by the Organization for Economic Cooperation and Development (OECD) – the Crypto-Asset Reporting Framework (CARF). The widespread, consistent and timely implementation of the CARF will further improve our ability to ensure tax compliance and clamp down on tax evasion, which reduces public revenues and increases the burden on those who pay their taxes.
As jurisdictions that play host to active crypto markets, we therefore intend to work towards swiftly transposing the CARF into domestic law and activating exchange agreements in time for exchanges to commence by 2027, subject to national legislative procedures as applicable. In order to ensure consistency and a smooth implementation for both business and governments, those of us that are signatory jurisdictions to the Common Reporting Standard will also implement, in line with the above timeline and subject to national legislative procedures as applicable, amendments to this standard as agreed by the OECD earlier this year.
We invite other jurisdictions to join us, with a view to enhancing the global system of automatic information exchange, one which leaves no hiding places for tax evasion.
The joint statement was signed by the following countries and jurisdictions, in addition to Estonia and the U.S.: Armenia, Australia, Austria, Barbados, Belgium, Belize, Brazil, Bulgaria, Canada, Chile, Croatia, Cyprus, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Korea, Liechtenstein, Lithuania, Luxembourg, Malta, Mexico, Netherlands, Norway, Portugal, Romania, Singapore, Slovakia, Slovenia, South Africa, Spain, Sweden, Switzerland, the U.K., the U.K's Crown Dependencies of Guernsey, Jersey, and the Isle of Man, and the U.K.'s Overseas Territories of the Cayman Islands and Gibraltar.
Estonia, along with more than a hundred other jurisdictions, has contributed greatly to the creation of a global network of cooperation between tax authorities, the finance ministry says.
The exchange of tax information on financial accounts has succeeded in ensuring the necessary flow of information for tax authorities to identify cases of cross-border tax evasion, the ministry adds.
A crypto or digital asset is a digital representation of value or a right that can be transferred or stored electronically using distributed ledger technology or similar technology.
A crypto-asset gets "minted" when new information is added to any particular blockchain, while users can exchange existing digital assets and/or create new ones via blockchain entries.
Each block in a blockchain contains encoded information about the preceding block, reiterating the order and structure of the blockchain as it grows, in so doing providing method of securely recording information on a peer-to-peer network, again in which new entries can be added even as existing entries cannot be altered.
Blockchains in turn facilitate crypto-assets, the most well-known being cryptocurrencies and Non-fungible tokens (NFTs).
Editor: Andrew Whyte