- Russia’s upper house has approved tax law amendments requiring mining companies to disclose client information, imposing a maximum 15% income tax on cryptocurrency transactions.
- This legislation comes in response to the increase in cryptocurrency activity in Russia and the country’s sovereign wealth fund choosing to invest in Bitcoin mining across the BRICS nation.
Russia’s upper house of parliament, the Federation Council, has approved a bill concerning the taxation of cryptocurrency transactions and mining activities. This move essentially exempts cryptocurrency transactions from value-added tax (VAT), reflecting the government’s intent to establish a structured legal framework for digital currency.
For a bill to become law, it must undergo several readings in the State Duma, secure the Federation Council’s approval, and obtain the president’s signature. With President Vladimir Putin’s anticipated support, the legislation will officially create a comprehensive taxation framework for digital currencies in Russia.
Key Features of the New Tax Bill
The legislation successfully passing through both houses of the Russian parliament underscores the government’s recognition of digital currencies. In a statement, the Federation Council indicated that the proposed amendments classify digital currencies as property, establishing a clear legal standing for cryptocurrencies in Russia’s financial framework.
One of the most notable features of this bill is the exemption of crypto transactions from VAT. This exemption is expected to encourage both individuals and businesses to engage more freely in cryptocurrency transactions without the additional burden of taxation that typically accompanies other forms of financial transactions.
The bill specifies that income generated from cryptocurrency trading will be subjected to taxation at the same rates as securities transactions. Personal income tax rates for digital currencies will stay at 13% for the majority of earners, rising to 15% for those with annual incomes above 2.4 million rubles beginning in 2025. Russia’s Finance Ministry stated that the choice to tax financial gains from mining is intended to find a middle ground that satisfies both business interests and government objectives.
Furthermore, the legislation mandates that operators of crypto-mining infrastructure must report client information to tax authorities. This requirement is part of an attempt to enhance transparency and accountability within the sector, which has often been criticized for its opacity. Additionally, income from mining activities will be taxed based on its market value at the time of receipt, further delineating the tax structure for individuals and companies involved in mining operations.
The initial bill addressing cryptocurrency taxation was first presented in Russia in December 2020 and underwent its first reading in 2021. As we reported last month, Russia’s Federal Tax Service suggested taxing miners on their unrealized profits. Additionally, the Russian government established a cap allowing unregistered individuals to mine Bitcoin, restricting their monthly electricity usage to no more than 6,000 kilowatt-hours.
Russia’s cryptocurrency laws indicate that they are on a similar path as the U.S., despite BRICS nations pursuing plans for de-dollarization. With Trump poised to assume office again as a pro-crypto president, this alignment could significantly benefit the crypto sector. Additionally, many expect that the upcoming Trump administration will designate Bitcoin as a strategic reserve asset and aim to accumulate 1 million BTC over the next five years.
