Russia's New Tax Framework for Digital Currencies Approved

Russia Approves New Tax Framework for Digital Currencies

According to PANews, Russia's upper house of parliament has recently approved a government-initiated bill that outlines a comprehensive tax framework for digital currencies. This significant development follows the bill's initial approval in the State Duma, the lower house of parliament, and its final passage in a plenary session held on a Wednesday.

Classification of Digital Currencies

The new law reclassifies digital currencies, specifically including those utilized as means of payment under experimental legal frameworks, as property under the Russian Federation Tax Code. This classification provides several benefits, particularly by exempting transactions related to digital currency mining and sales from value-added tax (VAT). As a result, participants in this sector may experience a reduced financial burden.

Exemptions and Reporting Requirements

Moreover, services rendered by authorized organizations that facilitate transactions within these experimental frameworks will also be exempt from VAT. However, a notable provision of the new law mandates mining infrastructure operators to report the personal data of individuals utilizing their systems to the tax authorities.

Taxation on Mining Income

Income derived from digital currency mining will now be considered taxable income, thus forming the basis for personal income tax. According to Danil Volkov, a department head at the Russian Ministry of Finance, businesses engaged in mining activities will be taxed at the standard corporate income tax rate. Additionally, the legislation specifies that mining income will be taxed based on asset values in international exchanges.

Personal Income Tax Rates

For the majority of digital currency earners, the personal income tax rate will remain set at 13%. However, a hike to 15% will be implemented for annual incomes surpassing 2.4 million rubles, beginning in 2025.

Path to Legislation

The legislative process for this bill has seen multiple readings in the State Duma and has received approval from the Federation Council. It is now awaiting the signature of President Vladimir Putin to become law. With anticipated support from the president, this legislation will formally establish a detailed tax framework for digital currencies across Russia.

Conclusion

This initiative marks a pivotal step towards regulating digital currencies in Russia, potentially easing the operations of digital currency businesses and promoting further investment in blockchain technologies.

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