Russian cryptocurrency mining firms that rent out rigs and data centers to overseas companies and pools will soon be subject to VAT under new government proposals. The Ministry of Finance is behind the plans, aiming to clarify tax procedures for leasing crypto mining equipment and create tax rules for firms providing computing power for mining to non-Russian clients.
The upcoming VAT charges are expected to apply to real-time, monthly, or annual leasing bills and transactions. The lack of clear explanations in current legislation has left providers uncertain about how to report their activities accurately. This move follows a law that came into effect in January, requiring all industrial crypto miners and mining infrastructure operators (MIOs) to register with the Federal Tax Service (FTS).
The FTS is still finalizing plans to tax crypto miners and MIOs on their annual profits. As of April 1, 116 MIOs and 606 industrial miners have signed up for the register, but there are believed to be more companies yet to comply. While there have been suggestions of introducing criminal liability for non-compliance, the FTS has advocated for leniency, acknowledging that some firms may need time to adjust.
MIO firms typically offer space, equipment, and other facilities for mining crypto in custom data processing centers, ranging from small buildings to large facilities capable of housing hundreds of rigs. In addition to MIOs, Russia is home to small-scale crypto mining “hotels” with capacities ranging from 14 MW to over 100 MW. Despite some investors pulling out following the conflict in Ukraine, many non-Russian pools and investors remain active in Russia due to the cheap electricity and low costs.
The Industrial Mining Association estimates that legalizing mining in Moscow could generate tax revenues of around 50 billion rubles ($612 million) annually. With some miners having filed tax declarations by the April 25 deadline, the industry’s tax contributions will soon be revealed. Russian Finance Minister Anton Siluanov has expressed interest in using crypto tokens produced from mining as settlement tools in foreign trade deals, as Russian firms turn to cryptocurrencies for cross-border transactions amid Western sanctions.
As the industry undergoes changes in taxation and regulation, the post on hosting foreign crypto miners in Russia facing VAT charges highlights the evolving landscape of cryptocurrency mining in the country.