Russian Government Approves Crypto Tax Legislation

The Russian government has approved draft amendments to a bill on taxing income and expenditures from crypto transactions and mining, as reported by the Russian news agency Interfax, citing the country’s Finance Ministry.

Key Provisions of the Proposed Legislation

• Classification of Cryptocurrencies: Cryptocurrencies will be classified as property for tax purposes.
• Tax on Mining Income: Income from mining activities will be taxed based on its market value at the time of receipt, with miners allowed to deduct mining operation expenses from taxable income.
• Exemption from VAT: Crypto transactions will be exempt from value-added tax. Income from crypto trading will be subject to the same tax rates as securities transactions, capped at a maximum personal income tax rate of 15%.
• Reporting Requirements: Mining operators will need to report information about individuals using their infrastructure to ensure compliance.

Background

The Finance Ministry indicated that the decision to tax financial income from mining is intended to balance the interests of businesses and the government. The original cryptocurrency taxation bill was first introduced in December 2020, with its first reading in 2021. Recently, Russia's Federal Tax Service proposed taxing miners' unrealized gains. Additionally, the government set a limit on unregistered individuals mining Bitcoin to a monthly power consumption of no more than 6,000 kilowatt-hours.