Russia Approves Bill Regulating Cryptocurrency Taxation
The Russian government has passed a bill regulating cryptocurrency taxation, prepared by the Ministry of Finance, according to local media reports. This legislation grants crypto the status of property, subjecting companies to income tax on crypto transactions and individuals to personal income tax.
Key Changes in Russia’s Tax Base
The tax rate for Russian citizens will vary from next year, ranging from 13% to 22%, depending on their income. Notably, crypto transactions will be exempt from value-added tax. Additionally, citizens and legal entities must report crypto transactions to the Federal Tax Service if receipts and write-offs exceed 600,000 rubles (approximately $6,000) per year.
Crypto mining infrastructure operators will be required to transfer data on the services rendered to the tax service. Failure to do so within the specified period may result in a fine of 40,000 rubles (approximately $400).
Taxation on Profits from Crypto
The tax on mining profits will involve a two-step process:
- Miners will make an advance payment when receiving cryptocurrency in their wallets.
- An additional tax will apply when the digital assets are sold.
If the value of the mined coins increases after the initial payment, miners will owe more tax. Conversely, if the value drops, overpayments can be recorded as losses.
Tax Rates and Calculations
According to the latest proposal from the Russian Ministry of Finance, the tax rate for the sale of cryptocurrencies may be 13% starting in 2025 and 15% if the citizen’s income exceeds 2.4 million rubles (approximately $24,000) annually. Income from transactions with digital currency will be included in the general tax base, along with revenue from the sale of shares, bonds, investment units, and other securities.
The tax base will be determined based on the market price of the digital currency at the time of receiving income. Foreign trading organizations will set the market price (closing price) based on transactions concluded during the day. If transactions for the same cryptocurrency were carried out on two or more foreign crypto exchanges, the taxpayer can independently choose the market price.
Comparing Russia’s Approach to North America’s
The mechanism for paying taxes on cryptocurrency in Russia is formed according to the North American approach. As Oleg Ogienko, deputy director general for communications at BitRiver, explained, the miner’s profit tax is levied upon receipt of crypto in a wallet minus reasonable and documented expenses.
As far as can be seen, the proposed mechanism is formed according to the North American approach. That is, first, the miner’s profit tax is levied upon receipt of cryptocurrency in his wallet, minus reasonable and documented expenses. Then, the miner’s capital gains tax is levied when the cryptocurrency is disposed of from its original wallet.
Unlike Russia, U.S. taxation varies based on how long the cryptocurrency is held. Short-term holdings are taxed at rates between 10% and 37%, depending on income. Long-term holders enjoy lower rates of 0%, 15%, or 20%.
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