New Russian Law Recognizes Digital Currencies as Property in Foreign Trade Settlements
Russian President Vladimir Putin has recently signed a groundbreaking new law that officially recognizes digital currencies as a form of property in foreign trade settlements. This move comes as part of an experimental legal regime (ELR) that aims to regulate and incorporate cryptocurrencies into the Russian economy. The law, reported by TASS on Friday, states that crypto mining and sales are not subject to value-added tax (VAT) within the ELR.
Tax-Free Crypto Transactions
Transactions involving digital currencies within the ELR will also be tax-free, providing a favorable environment for cryptocurrency activities. However, mining facility operators are required to report to tax authorities about their services. Failure to comply with reporting requirements may result in a fine of up to 40,000 rubles.
Taxation of Crypto Income
Income generated from mining crypto will be classified as “income in kind” and taxed based on the market value, with deductions allowed for mining expenses. Additionally, income from acquiring, selling, or trading cryptocurrencies will be subject to a two-tier personal tax structure. Tax rates are set at 13% for income up to 2.4 million rubles and 15% for amounts exceeding that threshold.
Corporate Taxation
Corporate entities engaged in crypto mining will be subject to the standard corporate tax rate of 25% starting in 2025, ensuring that businesses operating in the cryptocurrency space contribute their fair share of taxes.
Restrictions on Tax Regimes
The new legislation prohibits crypto miners and traders from accessing various preferential tax regimes, such as simplified taxation systems, agricultural tax benefits, self-employed status, and the patent system. They are also restricted from utilizing automated simplified taxation methods.
Implementation and Transition
The law is set to come into effect on the day of its official publication, with certain transitional provisions included. This comprehensive regulatory framework aims to provide clarity and structure to the cryptocurrency industry in Russia, ensuring compliance and accountability among market participants.
Continued Progress in Crypto Regulation
This latest development follows Putin’s signing of a law in August that defined and advanced crypto mining regulations in Russia. The law now permits only registered entities to conduct large-scale cryptocurrency operations, further solidifying the government’s oversight of the industry.