1. What Is CARF (Crypto-Asset Reporting Framework)?
CARF (Crypto-Asset Reporting Framework) is an OECD-developed global standard for the automatic exchange of information on crypto-assets between jurisdictions to enhance tax transparency.
The UAE’s Ministry of Finance has signed the Multilateral Competent Authority Agreement (MCAA) under CARF, with implementation set for 2027 and first reporting in 2028.
2. Why is the UAE implementing CARF?
The goal is to increase global transparency, ensure tax compliance, and regulate virtual asset activities—supporting the UAE’s reputation as a responsible financial hub.
3.Who Must Comply with CARF in the UAE?
All Reporting Crypto-Asset Service Providers (RCASPs) — including exchanges, custodians, brokers, wallet providers, and even some DeFi platforms operating in or from the UAE.
4. What Information Will Be Reported Under CARF?
- Customer identification details (including tax residency)
- Transaction types and values
- Crypto-asset balances
- Jurisdictional nexus (where the business operates or manages activities)
5. UAE-Specific Focus Areas and Regulatory Alignment
- Clarity on DeFi and NFT reporting rules
- Alignment with VARA and FTA frameworks
- Treatment of Free Zone and offshore entities
- Integration with AML/KYC and data privacy laws
6. When and How Will CARF Reporting Take Place?
- Proposed annual deadline: 30 June (data for the previous year)
- Reports will be submitted via a standardized XML format for exchange between tax authorities.
- UAE may allow flexibility or a later date (e.g., 31 August) for free zone entities.
7. Due-Diligence Obligations for RCASPs must:
- Identify and verify customers’ tax residency
- Obtain self-certifications and monitor changes in circumstances
- Apply controls for individuals and entities, including beneficial owners
8. CARF Compliance Challenges and Penalties in the UAE
CARF penalties may align with Common Reporting Standard (CRS) penalties — creating proportionality challenges for smaller RCASPs.
A tiered penalty structure and grace periods are recommended to ensure fairness.
9. What Companies Need to Do to Ensure CARF Compliance
- Initial implementation
- Annual compliance including system upgrades, training and policy updates and integration
10. How the UAE Ministry of Finance Plans to Support Implementation
- Issue UAE-specific CARF guidance and FAQs
- Develop a centralized reporting portal
- Conduct training workshops and pilot programs
- Establish a CARF Implementation Taskforce with regulators, VARA, and industry experts
11. How Affiniax Partners Can Help Your Business Prepare for CARF
CARF will transform how UAE crypto businesses report customer and transaction data. Early preparation, robust AML/KYC alignment, and system automation are crucial for regulatory readiness by 2027. Affiniax Partners, leading financial and crypto consultants in Dubai, can assist companies with CARF rollout.
