Crypto Asset Reporting Framework (CARF) in Singapore: A Summary
Crypto Asset Reporting Framework (CARF) in Singapore: A Summary
What is CARF?
The Crypto-Asset Reporting Framework (CARF) represents an internationally recognised standard developed by the Organisation for Economic Co-operation and Development (OECD) that aims to facilitate the automatic exchange of tax-relevant information regarding crypto-assets.
This framework was established in response to the rapid expansion of the crypto-asset market and aims to ensure that recent progress in global tax transparency is not gradually undermined.
Singapore's Implementation Timeline
Singapore has committed to implementing CARF according to the following timeline:
- Singapore is among the 47 jurisdictions that have announced plans to implement the international standard on automatic exchanges in crypto-asset reporting, with the first exchanges expected to commence by 2027.
- On 26 November 2024, Singapore executed the Multilateral Competent Authority Agreement on Automatic Exchange of Information according to the Crypto-Asset Reporting Framework ("CARF MCAA").
- The CARF standard is anticipated to take effect in 2027, thereby providing all stakeholders with sufficient time for preparation.
The implementation demonstrates Singapore's commitment to:
- International tax transparency.
- Preventing tax evasion related to crypto-assets.
- Maintaining Singapore's reputation as a responsible financial centre.
Scope of CARF in Singapore
CARF in Singapore will cover:
- Crypto-Assets Addressed: Digital assets utilising cryptographically secured distributed ledger technology for the purposes of payment or investment.
- Reporting Entities: The entities and individuals, specifically those identified as Reporting Crypto-Asset Service Providers, that are obligated to adhere to data collection and reporting requirements.
- Reportable Transactions: There are three categories of Relevant Transactions that are reportable under the CARF.
- Transactions involving relevant cryptocurrency assets and fiat currencies.
- Exchanges involving various forms of relevant crypto-assets.
- Transfers, encompassing Reportable Retail Payment Transactions, of pertinent crypto-assets
- Due Diligence Requirements: The procedures for conducting due diligence to identify Crypto-Asset Users, along with the relevant tax jurisdictions for both reporting and exchange purposes.
Who Must Comply
A reporting crypto-asset service provider in Singapore is required to adhere to the reporting and due diligence requirements if they are:
- An entity or individual that is a tax resident in Singapore.
- A legal entity that is incorporated or organised in accordance with the laws of Singapore, possessing legal personality and subject to tax filing obligations within Singapore.
- An entity or individual with a regular place of business in Singapore
Reporting Method
An electronic format (XML schema) shall be utilised to report CARF information to tax administrations for the purpose of exchanging CARF information. The IRAS is expected to publish an XML Schema User Guide that delineates specific requirements for reporting in due course.
Implications for Digital Asset Companies
Implementation will require companies to:
- Conduct a comprehensive gap analysis between the current data collection processes and the reporting requirements.
- Revise systems to align with new compliance standards
- Implement enhanced due diligence procedures.
Current Status
The Inland Revenue Authority of Singapore (IRAS) is currently:
- Formulating guidance for effective implementation.
- Organising meetings with industry stakeholders
- Establishing reporting frameworks and tools
In Singapore, companies can utilise the RCASP self-review tool offered by IRAS to assess whether they are subject to CARF reporting requirements.
For further guidance, IRAS will consult with the industry and publish detailed guidelines in due course.
Get In Touch
For more information please contact Michael Velten.
michael@veltenadvisors.com
+6590687547
391B Orchard Rd, Level 22, Ngee Ann City Tower B, Singapore 238874
