The President of Kazakhstan, Kassym-Jomart Tokayev, has enacted a law amending the country’s Tax Code to impose a higher tax rate on cryptocurrency miners. The increased levy will be based on the amount and the average price of the electricity used in the extraction of digital currencies such as Bitcoin.
Kazakhstan to Implement Higher Tax Rates on Crypto Miners
President Tokayev has signed new legislation amending the country’s law “On Taxes and Other Mandatory Payments to the Budget” and a supplementary law that enhances the implementation of Kazakhstan’s Tax Code. The amendments are set to introduce differentiated tax rates for crypto mining. Precise fees will be determined depending on the average cost of electricity used to mine coins during certain a tax period.
Rates begin at one Kazakhstani tenge ($0.002 at the time of writing) per kilowatt-hour (kWh) if a miner spent 25 tenges or more per kWh and may exceed 10 tenges if the tariff was 5 – 10 tenge per kWh. The lowest tax rate is available to crypto farms that used electricity generated from renewable sources at a rate of 1 tenge per kWh, regardless of its cost. The surcharge was introduced on January 1, 2022, after the nation saw increasing power deficits in 2021 owing to China’s decision to crackdown on the industry in May 2021.
Government Aims to Reduce Load on National Power Grid
Kazakhstan, like China, has sought to limit cryptocurrency mining by imposing restrictions on electricity supply during the ice-cold winter months by shutting down mining operations throughout the country, forcing many companies to relocate their mining operations to other mining areas or to move a large portion of their equipment out of the country.
In February, the President tasked all relevant authorities to identify cryptocurrency mining operations in the country and “multiply” the tax levy on crypto mining, and in April, state auditors went after mining companies exploiting tax benefits not intended for them. In the same month, the government officially announced that it was preparing to increase the tax rate on miners. One of the official proposals set forth by the government was to tie the new rate to the value of the newly minted cryptocurrency. Government officials in the capital Nur-Sultan expressed that such an approach would have a positive effect on the state budget.
According to statements, the revisions made to the tax code are aimed at leveling the load on the national power grid and discouraging the usage of locally produced electricity for cryptocurrency mining.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
