Russia’s new law, signed by President Putin, clarifies taxation for digital currency, regulating mining, trading, and corporate tax rates.
Russian President Vladimir Putin has signed a new law regulating the taxation of digital currency. This move aims to create clear rules for the industry. The law has already been published and outlines various provisions for individuals and businesses involved with digital assets.
Under the new law, the digital currency is now recognised as property. This involves currency utilised in international trading under the ELR for new technologies in digital space. Significantly, it should be realized that mining and selling digital currency will not attract value-added tax, or VAT. Likewise, those organizations that offer transaction services within the ELR will not pay taxes for the services they offer.
Another crucial regulation for the mining of the infrastructure operators is that they must declare the users who are releasing the cryptocurrencies to the tax authorities. This means that failure to submit this information on time may attract a fine of 40,000 rubles. This measure is intended to monitor people that engage in digital currency activities.
New Russian Tax Rules for Digital Currency Mining Explained
For individuals, any digital currency received through mining will be treated as other income in the form of kind. This term is used to describe compensation in some other form other than cash or money form of payment. The value of the mined currency will be calculated using quotations of the financial market. The income will then be subjected to the progressive personal income tax scale less any mining expenses.
There will be a different tax treatment given to income derived from the buying, selling, or any other related business with digital currency. The tax rate follows a two-tier system: Income tax rate is 13% for the income up to 2.4 million rubles and 15% for the income more than 2.4 million rubles. Such income will be incorporated into the same tax base as the gains from securities, bank deposits and anything of the sort.
For corporate entities, mining digital currency will be subjected to the normal corporate income tax rate of 25% from the financial year 2025.
The new law also has restrictions. The participants of mining and trading digital currency are not allowed to use the STs for agricultural activity or the “Automated simplified taxation system.” The law will take effect on the date of its official publication. However, some provisions will come into force at later dates as specified. The law also includes transitional rules to help entities adapt to the new system.
