Russian government greenlights crypto transactions tax law amendments

The Russian government approved a revised bill aimed at regulating crypto transaction taxation. Income generated from trading crypto will be taxed at a maximum rate of 15%. The rate aligns with the tax on income securities transactions. The bill that was initially introduced in December 2020 will be finalized soon after clearing a crucial obstacle.

The Finance Ministry announced that the new tax law will recognize digital currency as property for taxation purposes. The Russian government’s decision to exempt crypto transactions from value-added tax (VAT) was aimed at encouraging crypto adoption. According to a statement from the Ministry of Finance, the amended bill also introduced rules for the taxation of crypto mining income and expenses. The rules will also cover the purchase and sale of the mined digital currencies as well as the responsibilities of mining infrastructure operators related to tax control.

Russia’s Finance Ministry tightens the noose on crypto taxes by approving tax law amendments

RUSSIA’S TAX HAMMER HITS CRYPTO: HERE’S THE LOW-DOWN

Russia’s Ministry of Finance is eyeing a 15% personal income tax on crypto gains, applied even to mining profits.

Tokens mined? Taxed at market value when they hit your wallet.

And crypto’s now considered “property,” so no… pic.twitter.com/JcPpF9LNUA

— Mario Nawfal’s Roundtable (@RoundtableSpace) November 19, 2024

The Russian government passed amendments to the bill on the taxation of income and expenditure from the mining, purchase, and sale of crypto. The new rules designed to bring crypto under a clearer tax framework have been stalled for several years. Under the new legislation, digital currency will now be defined as property for taxation purposes. 

Income derived from crypto mining will be subject to income tax based on its market value at the time it is received in a wallet. In this case, the crypto’s closing price on major exchanges that particular day. Miners will, however, be allowed to deduct mining-related expenses such as hardware depreciation and electricity costs. The Russian government also decided to exempt crypto transactions from VAT to encourage the adoption of digital currencies. Importantly, income from crypto transactions and income from securities transactions will be under the same tax bracket with a maximum rate of 15%. 

The bill that was introduced to parliament in December 2020 and passed in the first reading in February 2021 will soon be finalized to provide a predictable tax framework.

Miners to submit information to the government under the new tax law

Operators of crypto mining infrastructure will be required to report all service provision data to the Federal Tax Service (FTS). Failure to report or missed deadlines will lead to a $417 (40K rubles) fine. The FTS will use this data to monitor and assess taxes as well as to ensure compliance with the new tax laws.

The Finance Ministry said that discussions with businesses resulted in a decision that balanced the interests of the industry and the state. The fair approach is aimed at promoting innovation and growth in the crypto space. 

Individual entrepreneurs and institutions will only be allowed to mine digital currencies after their official inclusion in the Federal Tax Service’s special register. However, individuals not listed in the special register as ‘individual entrepreneurs’ will be allowed to mine crypto as long as they do not exceed the six thousand kWh per month limit.

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