- The Russian government has proactively moved toward the crypto tax on mining and related trading gains.
- Russia has continued to make impressive moves to embrace crypto more widely, with plans to legalize national exchanges.
The Russian Finance Ministry disclosed that the government has approved draft amendments to a bill on taxing income and expenditures from crypto transactions and mining. According to a report from Russian news agency Interfax, the proposed legislation will classify cryptocurrencies as property for tax purposes.
Details of The Crypto Tax Proposal
According to the details, income obtained from crypto mining activities will be taxed based on its market value at receipt. However, miners can deduct expenses incurred during mining operations from their taxable income.
The proposed tax legislation exempts crypto transactions from Value-Added Tax (VAT). Income from crypto trading will have the same tax rates as securities transactions. Therefore, the bill proposes a maximum personal income tax rate of 15%.
Russian legislators have enjoined all mining operators to report information on the individuals using their infrastructure. This is to ensure all individuals in Russia receiving income from crypto mining comply with the proposed tax legislation. The Ministry of Finance said the proposed crypto tax law aims to balance the interests of businesses and the state.
Interfax noted that the government submitted the original crypto taxation bill in December 2020, and the first reading passed in 2021. Intriguingly, Russia’s Federal Tax Service proposed to tax miners’ unrealized gains last month.
Meanwhile, the recent proposal comes only shortly after Russia’s President Vladimir Putin introduced stringent rules to crypto mining activities, as CNF reported. The government mandated that only registered Russian corporate enterprises or individual businessmen could engage in mining operations. This new law seeks to reduce illegal activity, especially concerning money laundering and terrorist financing, which are sometimes linked to the unregulated nature of crypto transactions.
The crypto mining industry in Russia has generated substantial revenue for the government. According to a CNF article, Russia’s Bitcoin mining in 2023 brought 54,000 new Bitcoin (BTC) into circulation.
This astounding milestone resulted in 50 billion rubles (about $556 million) in tax revenue for the Russian government.
Russia’s Crypto Dealings
Russia’s involvement with digital assets is part of an attempt by the country to overtake the US as the global crypto hub. The government has shifted its tough stance on crypto and is now one of the most bullish nations globally.
Besides permitting crypto mining, the Putin government-approved crypto payments and recently conducted trials.
As reported by CNF, the system will rely on Russia’s National Payment Card System to facilitate the swap between the country’s ruble and cryptocurrencies. The system is also operated and regulated by the Central Bank, giving the government added confidence.
Furthermore, Finance Minister Anton Siluanov revealed that the government is working to legalize crypto exchanges. However, he added that appropriate regulations have yet to be drafted to make this possible.
