Russian President Vladimir Putin has signed the final law on crypto taxation while recognizing digital assets as property. This taxation law will also be applicable for currencies used for foreign trade settlements “within the framework of the experimental legal regime (ELR).”
Russian President Putin Exempts Bitcoin, Crypto from VAT
As per the new Russian regulations, mining and sales of digital currency won’t be subject to value-added tax (VAT). Furthermore, services related to transactions within the electronic payment system (EPR), including crypto, will not incur tax liabilities.
On the other hand, operators of crypto-mining infrastructure will need to notify tax authorities regarding users using their services for crypto issuance. Failure to submit this information in a timely manner could attract a fine of 40,000 rubles.
As per the document signed by Russian President Putin, cryptocurrency earned through mining will be classified for personal income tax purposes. The tax calculation will happen based on the market value of the currency at the time of acquisition. The draft law says that Russia will allow deductions for mining-related expenses.
Income from the acquisition, sale, or other transactions involving digital currency will be taxed under a two-tier system: a 13% rate for income up to 2.4 million rubles, and a 15% rate for income exceeding that amount. This income will be included in the same tax base as earnings from securities, bank deposits, and other sources. For corporate income tax, digital currency mining will be taxed at the standard corporate rate of 25%, set to take effect in 2025.
The development comes at a time when other markets such as Hong Kong plan absolute exemption of crypto taxation. As Hong Kong seeks to become Asia’s crypto hub, this move will likely attract more investor capital, especially from regions like China that have hostility towards digital assets.
Crypto Taxation Law Comes With Some Restrictions
The crypto taxation law introduced by Russian President Putin comes with some restrictions from organizations and individual businessmen engaged in cryptocurrency mining and sales. As per the new regulations, these entities won’t be eligible to switch to the simplified taxation system i.e. the single agricultural tax, or the “Automated Simplified Taxation System”.
Additionally, the patent system and the self-employed tax regime will not apply to digital currency mining and transactions. The law will come into effect on the date of its official publication, with certain provisions subject to different implementation timelines.
Ever since the Ukraine war, Russia has been leveraging Bitcoin to evade Western sanctions. At the BRICS summit last month, the member nations also had a discussion of using crypto for cross-border payments.
The post Russian President Putin Signs Game Changing Crypto Taxation Law appeared first on CoinGape.