Putin Enacts New Law for Digital Currency Taxation in Russia

New Law on Digital Currency Taxation in Russia

In a significant regulatory move, Russian President Vladimir Putin has signed a law that establishes a framework for the taxation of digital currencies. This new legislation classifies digital currencies as property, especially in the context of foreign trade payments within experimental legal regimes in the digital innovation sector.

Key Features of the Legislation

• Exemption from VAT: One of the noteworthy aspects of the law is that the mining and sale of digital currencies will not be subject to value-added tax (VAT).
• Reporting Requirements: Operators of mining infrastructure are now required to report to the tax authorities whenever their services are utilized for issuing cryptocurrencies. Non-compliance could result in fines of up to 40,000 rubles.
• Personal Income Tax Implications: Digital currencies acquired through mining are categorized as in-kind income. The value of this income will be determined based on market quotations and will be subject to progressive tax rates.

Tax Rates for Digital Currencies

The taxation framework also includes a two-tier personal income tax rate system for income generated from acquiring, selling, or otherwise keeping digital currencies:

1. Income up to 2.4 million rubles will be taxed at a rate of 13%.
2. Income exceeding 2.4 million rubles will be taxed at a rate of 15%.

These earnings will be combined with other income sources, such as securities and bank deposits, for tax purposes.

Corporate Taxation on Digital Currency Mining

For entities involved in digital currency mining, corporate income tax will apply at the standard rate of 25%, which is set to come into effect in 2025.

Conclusion

This new law demonstrates Russia's approach towards establishing a structured taxation regime for digital currencies, aligning with global trends. As the digital currency market continues to evolve, ongoing adjustments to legislation and regulations will likely be necessary to address this rapidly changing landscape.