Hong Kong has launched a public consultation on how to implement the International Crypto Asset Reporting Framework, or CARF, as it moves to align crypto tax data sharing with global standards.
According to a press release on Tuesday, Hong Kong is seeking opinions on both the implementation of CARF and changes to tax reporting rules. The announcement explicitly links the measure to the local administration’s efforts to combat cross-border tax evasion.
The measure constitutes standardization rather than a change of direction by the local government. As the announcement notes, Hong Kong authorities have been annually exchanging financial account information with partner jurisdictions since 2018.
Hong Kong Treasury and Financial Services Secretary Christopher Hui said the adoption of CARF would demonstrate the government’s “commitment to promoting international tax cooperation and combating cross-border tax evasion.”
In addition to joining CARF, Hong Kong is also seeking feedback on the adoption of the Common Reporting Standard (CRS). Like CARF, CRS is an initiative of the Organization for Economic Cooperation and Development (OECD) that aims to standardize aspects of tax reporting internationally.
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CARF sees widespread international adoption
CARF has gained traction among regulators around the world. In early November, reports indicated that 47 national governments had issued a joint commitment to adopt it quickly. Brazil would also have been considering joining the data sharing program.
Others seem to be dragging their feet. In late November, Switzerland delayed CARF implementation until 2027 and is still deciding which countries it will share data with. Also in November, the United States was reviewing the Internal Revenue Service’s (IRS) proposal to join the CARF program.
However, adoption of the data sharing program has been growing steadily. A list, maintained by the OECD and updated on December 4, shows that 48 countries have committed to adopt CARF by 2027, 27 by 2028 and the United States by 2029.
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This brings the total to 76 countries that have committed to sharing crypto data so far. A separate OECD list shows that 53 countries have already signed the Multilateral Competent Authority Agreement, the legal instrument that allows automatic data exchange.
Recent figures show a 70% year-on-year increase in Cayman Islands foundation company registrations. Legal professionals at Walkers said CARF likely excludes structures that simply hold crypto assets, such as protocol treasuries, investment funds or passive foundations, making Cayman Islands foundations a potential escape.
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