Putin Approves Law on Cryptocurrency Definition and Taxation in Russia
Russian President Vladimir Putin has signed a law that includes regulations regarding the taxation of cryptocurrencies. This law defines cryptocurrencies and establishes the tax principles, while also covering mining and sales transactions.
Cryptocurrency will be recognized as property
According to the law, cryptocurrency will now be officially considered as property. This definition will particularly apply to cryptocurrencies used in foreign trade transactions within the framework of the "experimental legal regime in the field of digital innovations (EPR)."
However, profits from cryptocurrency mining and sales will be exempt from Value Added Tax (VAT). Additionally, there will be no taxes on services provided by organizations that facilitate transactions under the EPR.
Cryptocurrency mining revenues and taxation are taking shape in Russia
Cryptocurrency obtained from mining activities will be regarded as a natural income. In this context, the value of the earnings will be determined based on market prices, and income tax (NDFL) will be calculated according to standard progressive rates. However, mining costs will be subject to tax deductions.
Income obtained from the purchase, sale, or circulation of cryptocurrency will be subject to a two-tier income tax rate. For incomes up to 2.4 million rubles, a 13% tax will be applied, while income exceeding this amount will be taxed at a rate of 15%. These incomes will be assessed under the same tax base as those from stock transactions, bank deposits, and other sources.
Tax obligations for cryptocurrency companies
Companies' revenues from cryptocurrency mining will be taxed at a standard corporate tax rate of 25% starting from 2025. Furthermore, operators managing mining infrastructure will be required to report the identity information of users to tax authorities. Failure to provide this information in a timely manner may result in fines of up to 40,000 rubles.
Certain restrictions have also been imposed on tax obligations related to mining and cryptocurrency transactions. Companies engaged in these activities will not be able to benefit from simplified tax systems or special tax regimes.
New regulation comes into effect
The law will come into effect on the date of its official publication. However, transitional arrangements are planned for some provisions. Specifically, additional time will be granted to comply with existing regulations in the regimes applied to mining and cryptocurrency transactions.
This new regulation in Russia aims to clarify the use and taxation of cryptocurrencies, eliminating uncertainties in the sector.