Crypto-Asset Reporting Framework (CARF)

Cryptocurrency and digital assets can be issued, recorded, encrypted, transferred, and stored in a decentralized manner, eliminating the need for traditional financial intermediaries or central administrators. As such, they present a significant risk of undermining the progress made in global tax transparency through the implementation of the Common Reporting Standard (CRS). In response to this challenge, a new framework for the automatic exchange of information, known as the Crypto-Asset Reporting Framework (CARF), was developed alongside amendments to the CRS.

The primary objective of CARF is to provide tax authorities with accurate and comprehensive data on crypto-asset transactions, supporting effective tax compliance and anti-money laundering initiatives. This framework will assist governments in monitoring cross-border crypto transactions, enhancing regulatory oversight, and mitigating the risk of tax evasion through the use of digital assets and cryptocurrencies for tax avoidance.

CARF establishes the automatic exchange of tax-relevant information on crypto-assets, alongside similar due diligence requirements imposed on Barbados Reporting Financial Institutions under the CRS. Additionally, the framework mandates the collection of prescribed information—such as tax residency and tax identification numbers—on all account holders. It also requires the reporting of financial transactions and introduces provisions to prevent duplicative reporting with the CRS.

Barbados is set to implement the CARF framework in 2027, with the first exchange of information scheduled for 2028. This commitment follows Barbados’ endorsement of the CARF Joint Statement, published in November 2023, in which the country pledged to implement these reforms in alignment with its international partners.

Announcements

Guidance Note