This week in taxation: the OECD finalises crypto laws, and the UK slaps a windfall tax

The OECD has finalised its reporting regulations for cryptocurrencies and other digital assets, while the UK government is considering imposing an energy price ceiling with a windfall tax.

On Monday, October 10, the OECD announced its crypto-asset reporting framework, which established worldwide transparency criteria for the automated exchange of information on blockchain transactions.

Cryptocurrencies and other crypto-assets have caused tax authorities regulatory issues. The framework for crypto-asset reporting establishes reporting requirements for intermediaries and service providers participating in the exchange of these decentralised assets.

This approach was included in the OECD secretary-tax general's report to finance ministers and central bank governors at the G20 summit in Washington DC on Wednesday, October 12. This means that the guidelines might be implemented across countries as early as 2023.

Crypto traders should expect the OECD framework to be incorporated into domestic legislation. This will assist tax administrations in establishing tax compliance rules for the cryptocurrency business.

The Bank of England's chief economist has hinted at a rate hike in November.

Huw Pill, the Bank of England's chief economist, stated on Wednesday, October 12, at the Scottish Council for Development and Industry in Glasgow that a "major monetary policy reaction" was expected as inflation continued to damage the UK economy.

Pill stated that the month of October will be pivotal in the BoE's next step. To counterbalance the price increase, the base interest rate is set at 2.25%. According to Bank of England governor Andrew Bailey, prices were 9.9% higher in August than a year ago, owing primarily to the Russia-Ukraine conflict.

Since the'mini-budget' provoked financial market chaos, Prime Minister Liz Truss has been obliged to make a series of U-turns on tax policy. However, the rate hike will have an impact on transfer pricing for inter-company loans.

The UK government has agreed to a windfall tax on energy.

For Wednesday, October 12, the United Kingdom set a temporary revenue cap on low-carbon electricity companies, reversing the government's position to avoid additional energy taxes.

This interim measure is aimed at energy companies who offer power at above-average prices. There are no details on the upcoming price cap, but tax professionals say it should not deter investment in renewable energy. They are advocating for a restriction equal to the €180 ($175) cap in the EU.

Corporate tax teams dealing with the regulations argue that if the measure is not adequately constructed, investment will suffer. The price cap is being described as a de facto windfall tax by tax directors, but the Department for Business, Energy, and Industrial Strategy claims this is not the case.

The IMF, on the other hand, accused the UK government of complicating the Bank of England's work of reducing inflation by reversing the increase in corporate tax from 19% to 25%. The move to cap earnings at renewable energy companies could be interpreted as yet another symptom of insecurity.

The EU has urged the United States to modify its electric vehicle tax advantages.

The European Commission is urging the US government to reexamine tax breaks included in the Inflation Reduction Act, which was passed in August, but a trade war is possible.

To encourage the development of green vehicles made in the United States, electric carmakers are given considerable tax incentives under the IRA, including tax credits for electric vehicle batteries. However, EU officials regard this as a new type of protectionism.

The European Commission's executive vice president, Margrethe Vestager, told the Financial Times that the EU may take legal action through the World Trade Organization (WTO).

"As a general rule, you should not pit friends against friends," Vestager stated on Sunday, October 9. "You have an unbalanced subsidy in our opinion."

Officials from the EU and the US will meet in December for the Trade and Technology Council conference. The aim is that this may be resolved without involving the WTO.

By fLEXI tEAM