The Russian Government to Introduce Crypto Tax of up to 15%
The Russian government plans to tax income from cryptocurrency mining and transactions at a rate of up to 15%, classifying cryptocurrencies as taxable assets.
Miners will be able to deduct their operational expenses from their taxable income, while transactions will be exempt from VAT to encourage a favorable business environment.
The new regulations will include reporting obligations for mining operators to enhance tax compliance and limit evasion.
Transactions in digital currency will not be subject to value-added tax. Income from digital currency transactions will be accounted for in the same tax base as income from securities transactions. Thus, the maximum personal income tax rate for cryptocurrency taxation will not exceed 15%.
The 15% Crypto Tax Proposal in Russia
The Russian government has recently approved amendments to a bill aimed at taxing income from crypto transactions and mining. According to Interfax news agency, citing the Russian Ministry of Finance, these amendments will classify income generated from crypto activities as taxable assets. This marks a significant evolution in the regulation of digital assets in Russia, reflecting a desire to firmly regulate a previously relatively unrestricted sector.
Classification and Taxation of Mining Income
The new provisions introduce the classification of cryptocurrencies as property, resulting in the taxation of mining income based on their market value at the time of receipt. This approach could enhance transparency in financial flows related to mining activities, while allowing miners to deduct their operational expenses from their taxable income. Such a measure aims to balance the interests of businesses and the state, providing miners with flexibility to maintain profitability while ensuring a tax contribution to the national budget.
VAT Exemption and Transaction Taxation
The bill also provides for an exemption from value-added tax (VAT) for crypto transactions, although income generated from trading will be subject to the same tax rates as those applied to securities transactions. Thus, the maximum personal income tax rate could reach 15%. This differential tax policy seems to seek a more favorable business environment for cryptocurrency exchanges while regulating gains from this activity.
Enhanced Control and Compliance
To ensure the effective implementation of these new regulations, mining operators will be required to report information about individuals using their infrastructure. This obligation aims to counter tax evasion and limit illicit practices by precisely identifying participants in the mining ecosystem.
In October, the Russian government had already taken measures to limit the energy consumption of unregistered miners, setting a monthly limit of 6,000 kilowatt-hours.
Crypto in Russia: A Legislative Framework Under Construction since 2020
The path towards cryptocurrency taxation legislation in Russia is not new. The first bill was introduced in December 2020, with a reading adopted in 2021. Since then, the evolving discussions highlight the complexity of integrating cryptocurrencies into the existing legal framework while adapting to the realities of a rapidly expanding market.
The Ministry of Finance justifies these new taxes by the need to create a framework that, while imposing taxes on mining and transactions income, maintains the attractiveness of the sector. This bill reflects a compromise between strict regulation and the competitiveness of crypto companies operating in Russia.
