Russia has approved an amendment related to the taxing of its crypto transactions. With this, the new tax rate for income generated from trading crypto was pegged at 15%. The development means the Russian government has successfully brought crypto tax on par with tax on income securities transactions.
The bill, initially introduced in December 2020, just cleared its last hurdle, leading to its approval. According to the Finance Ministry, crypto will be treated as property when the tax law takes effect. The government recently announced the exemption of crypto from value-added tax (VAT) to boost its adoption.
The statement from the Finance Ministry said the new law will also include taxing of income and expenses incurred during mining activities. Aside from extending coverage to the sale of mined assets, it will also look into the responsibilities of mining operators regarding tax control.
Russia on the verge of approving its new crypto tax law
The development means the Russian government is ready to pass its amended bill on income and expenditure on mining, sales, and purchase of digital assets. The proceeds from mining will be taxed under the income tax rule. The tax will also be deducted based on the market value of the crypto when it enters the wallet. This means that the tax will be calculated based on the closing price of the asset on exchanges.
Miners will be able to remove certain costs from their mining expenses like electricity costs and hardware depreciation costs. The exemption of crypto transactions from VAT has been lauded as a great move, with most traders agreeing it will boost adoption. The 15% tax will now cover income from securities and crypto transactions.
The bill, introduced in December 2020, has passed several stages in the Russian parliament. The landmark moment was the bill passing its first reading in February 2021. After the amendments are made and effected, it would pass the final reading and a new crypto-friendly tax framework will be stamped into law.
Miners are to submit their details to the FTS
Under the new law, there is a provision for miners to submit all their service provision data to the Federal Tax Service (FTS). Any miner who fails to provide the details before or on the deadline will be slammed with a $417 fine. The FTS will use the submitted data to monitor and ensure miners follow the new tax law.
According to the Finance Ministry, discussions with public businesses regarding the new tax law were fruitful, meaning they are on the same page with the regulators. The approach aims to ensure that the ministry aids innovation and does not stifle growth in the crypto sector.
Businesses and individuals will need to register with the FTS before they are allowed to carry out mining operations in the country. However, individuals not in the register can still mine crypto provided they obey the law’s threshold of staying under 6,000 kWh every month.