Disclaimer: This article is for informational purposes only and does not constitute financial advice. BitPinas has no commercial relationship with any mentioned entity unless otherwise stated.
📬 Get the biggest crypto stories in the Philippines and Southeast Asia every week — subscribe to the BitPinas Newsletter.
[Summary] Rafael Padilla on CARF: Considering that the Philippines has not even signed the Multilateral Competent Authority Agreement on Automatic Exchange of Information via CRS more than 10 years after its introduction, and considering further that the activation of the automatic exchange of information will require the Philippines to transpose the CRS into a domestic statute—which will therefore entail the Congress to act, the implementation of CARF by 2028 seems to be a tall order for the DOF and the Bureau of Internal Revenue.
Primer on the Cryptoasset Reporting Framework (CARF)
Atty. Rafael Padilla
Professor of Law, San Beda Alabang School of Law
Author, Fintech: Law & First Principles; Crypto and the Law
[email protected]
17 June 2025
1. Global tax transparency initiative and the CRS
The Organisation for Economic Co-operation and Development (OECD) spearheaded the development of the Common Reporting Standard (CRS), which was designed to promote tax transparency with respect to financial accounts held abroad (i.e., offshore). Since the CRS was adopted in 2014, more than a hundred jurisdictions have implemented the CRS (excluding the Philippines) and financial markets have continued to evolve, giving rise to new investment and payment practices. The CRS is a key tool in ensuring transparency on cross-border financial investments and in fighting offshore tax evasion.
One major development since the CRS was adopted is the emergence of cryptoassets, which can be transferred and held without interacting with traditional financial intermediaries and without any central administrator having full visibility on either the transactions carried out, or the location of cryptoasset holdings. This development reduced tax administrations’ visibility on tax-relevant activities carried out within the sector, increasing the difficulty of verifying whether associated tax liabilities are appropriately reported and assessed, which poses a significant risk that the accomplishments in global tax transparency might gradually erode.
2. CARF as an addition to the CRS
In light of the specific features of the crypto markets, the OECD, working with G20 countries, developed the Cryptoasset Reporting Framework (CARF) between 2022 and 2023, a dedicated global tax transparency framework which provides for the annual, standard, and automatic exchange of information on transactions in cryptoassets with the jurisdictions where the relevant taxpayers reside.
The rapid growth of the market for cryptoassets has impacted tax administrations worldwide. In particular, several characteristics of cryptoassets are likely to pose new challenges in the efforts to ensure tax compliance. Crypto’s reliance on cryptography and blockchain or distributed ledger technology means that they can be issued, recorded, transferred and stored in a decentralized manner, without the need to rely on traditional financial intermediaries or central administrators. In particular, the crypto market is characterized by a shift away from traditional financial intermediaries, the typical information providers in third-party tax reporting regimes, such as the CRS, to a new set of intermediaries and other service providers which became subject to financial regulation only recently and are not yet subject to tax reporting requirements with respect to their users.
3. Coverage of CARF: “Relevant” CASPs
Intermediaries and other service providers facilitating exchanges between “Relevant Crypto-assets,” as well as between cryptoassets and fiat currencies, play a central role in the cryptoasset market. As such, those entities or individuals that as a business provide services in facilitating exchange transactions in relevant cryptoassets, for or on behalf of customers, are considered “Reporting Crypto-Asset Service Providers” (CASP) under the CARF.
Reporting CASPs are expected to have the best and most comprehensive access to the value of the relevant cryptoassets and the exchange transactions carried out. These intermediaries and other service providers also fall within the scope of obliged entities (i.e. “covered persons”) for purposes of the Financial Action Task Force (FATF)’s guidance for virtual asset service providers. As such, they are in a position to collect and review the required documentation of their customers, including on the basis of AML/KYC documentation.
The functional definition of CASP covers not only cryptoasset trading platforms, but also other intermediaries and other service providers providing exchange services such as brokers and dealers in cryptoassets and operators of cryptoasset automated teller machines (ATMs). Further, consistent with the FATF’s guidance on virtual asset service providers, the scope of application of the CARF could cover certain decentralized exchanges in certain circumstances.
4. Where to report: nexus rules
With respect to the reporting nexus, Reporting CASPs will be subject to the rules when they are (i) tax resident in, (ii) both incorporated in, or organized under the laws of, and have legal personality or are subject to tax reporting requirements in, (iii) managed from, (iv) having a regular place of business in, or (v) effectuating relevant transactions through a branch based in, a jurisdiction adopting the CARF. The CARF also contains rules to avoid duplicative reporting in case a Reporting CASP has nexus with more than one jurisdiction by creating a hierarchy of nexus rules and including a rule for cases where a Reporting CASP has nexus in two jurisdictions based on the same type of nexus.
5. What needs to be reported by CASPs
For each calendar year or other appropriate reporting period, the CARF requires a Reporting CASP to report the following information with respect to its cryptoasset users:
the name, address, jurisdiction(s) of residence, TIN(s) and date and place of birth (in the case of an individual) of each Reportable User and, in the case of any Entity that, after application of the due diligence procedures, is identified as having one or more Controlling Persons that is a Reportable Person, the name, address, jurisdiction(s) of residence and TIN(s) of the Entity and the name, address, jurisdiction(s) of residence, TIN(s) and date and place of birth of each Reportable Person, as well as the role(s) by virtue of which each Reportable Person is a Controlling Person of the Entity; the name, address and identifying number (if any) of the Reporting Crypto-Asset Service Provider; for each type of Relevant Crypto-Asset with respect to which it has effectuated Relevant Transactions during the relevant calendar year or other appropriate reporting period:
-
- the full name of the type of Relevant Crypto-Asset;
- the aggregate gross amount paid, the aggregate number of units and the number of Relevant Transactions in respect of acquisitions against Fiat Currency;
- the aggregate gross amount received, the aggregate number of units and the number of Relevant Transactions in respect of disposals against Fiat Currency;
- the aggregate fair market value, the aggregate number of units and the number of Relevant Transactions in respect of acquisitions against other Relevant Crypto-Assets;
- the aggregate fair market value, the aggregate number of units and the number of Relevant Transactions in respect of disposals against other Relevant Crypto-Assets;
- the aggregate fair market value, the aggregate number of units and the number of Reportable Retail Payment Transactions;
- the aggregate fair market value, the aggregate number of units and the number of Relevant Transactions, and subdivided by Transfer type where known by the Reporting Crypto-Asset Service Provider, in respect of Transfers to the Reportable User not covered by subparagraphs A(3)(b) and (d);
- the aggregate fair market value, the aggregate number of units and the number of Relevant Transactions, and subdivided by Transfer type where known by the Reporting Crypto-Asset Service Provider, in respect of Transfers by the Reportable User not covered by subparagraphs A(3)(c), (e) and (f); and
- the aggregate fair market value, as well as the aggregate number of units in respect of Transfers by the Reportable Crypto-Asset User effectuated by the Reporting Crypto- Asset Service Provider to wallet addresses not known by the Reporting Crypto-Asset Service Provider to be associated with a virtual asset service provider or financial institution.
5. What transactions need to be reported by CASPs?
The following types of transactions are considered “Relevant Transactions” that are reportable under the CARF: (1) exchanges between cryptoassets and fiat currencies; (2) exchanges between one or more forms of relevant cryptoassets; and (3) transfers (including reportable retail payment transactions) of cryptoassets. Transactions will be reported on an aggregate basis by type of cryptoasset and differentiating outward and inward transactions. To enhance the usability of the data for tax administrations, the reporting on exchange transactions must be distinguished from crypto-to-crypto to crypto-to-fiat currency transactions. Reporting CASPs must also categorize transfers (e.g. airdrops, income derived from staking, or loan), in cases where they have information of the type or nature of transaction.
The CARF foresees that for crypto-to-fiat currency transactions, the fiat amount paid or received is reported as the acquisition amount or gross proceeds. For crypto-to-crypto transactions, the value of the cryptoasset (at acquisition) and the gross proceeds (upon disposal) must also be reported in fiat currency as unit of account. In line with this approach, the transaction is split into two reportable elements for crypto-to-crypto transactions: (1) disposal of cryptoasset, i.e., reportable gross proceeds based on the market value at the time of disposal; and (2) acquisition of cryptoasset, i.e., reportable acquisition value based on market value at the time of acquisition. The CARF also contains detailed valuation rules for cryptoassets subject to reporting.
To optimize visibility on transfer transactions, the CARF requires the reporting of the number of units and the total value of transfers of cryptoassets facilitated by a Reporting CASP, on behalf of a user, to wallets not associated with a virtual asset service provider or a financial institution. In case this information gives rise to compliance concerns, tax authorities could then request more detailed information on the wallet addresses associated with a user through existing exchange of information channels.
Lastly, the CARF also applies to certain cases where a CASP processes payments on behalf of a merchant accepting cryptoassets in payment for goods or services, focusing on high-value transactions (i.e. reportable retail payment transactions). In such cases, the Reporting CASP is required to also treat the customer of the merchant as a user (provided the Reporting CASP is required to verify the identity of the customer based on anti-money laundering rules), and report the value of the transaction. This information is expected to provide tax administrations with information on cases where cryptoassets are used to purchase goods or services, in which capital gain may be realized on the disposal of such assets.
6. Conclusion: status of commitments as of June 2025
50 countries and jurisdictions have officially signed the CARF as of March 2025, although 69 countries/jurisdictions in total have pledged to implement the OECD’s CARF by 2027 (52) and 2028 (17, including the Philippines). As part of their commitment, these jurisdictions plan to transpose the CARF into domestic law and activate exchange agreements in time for Reporting CASPs to commence reporting by 2027.
In the Philippines, the Department of Finance (DOF) has expressed the Philippines’ commitment to implement CARF by 2028 in order to address cross-border tax evasion and illicit financial flow, as well as improve efficiency and transparency in tax administration. DOF Secretary Ralph Recto noted that cryptocurrencies have become “one of the preferred means for transactions.” Therefore, the “government must ensure that crypto-asset users are paying their fair share of taxes and that no illicit financial activity goes unpunished,” according to Secretary Recto.
Considering that the Philippines has not even signed the Multilateral Competent Authority Agreement on Automatic Exchange of Information via CRS more than 10 years after its introduction, and considering further that the activation of the automatic exchange of information will require the Philippines to transpose the CRS into a domestic statute—which will therefore entail the Congress to act, the implementation of CARF by 2028 seems to be a tall order for the DOF and the Bureau of Internal Revenue.
This article is published on BitPinas: Rafael Padilla: Primer on the Cryptoasset Reporting Framework (CARF)
What else is happening in Crypto Philippines and beyond?
