Russia has the potential to develop the cryptocurrency industry, but it won’t be easy to overcome all challenges. Interestingly, Russian lawmakers are actively preparing new legislation for taxing cryptocurrencies like Bitcoin. Based on the information provided by the Russian State Duma, the Duma’s Committee on State Building and Legislation approved a bill on cryptocurrency taxation on February 15.
It is worth noting that, the new bill represents a set of amendments to the Russian federal tax code. Interestingly, as part of the draft bill, the country’s government officially recognizes cryptocurrencies like Bitcoin as property, aiming to tax profits from crypto trading by Russian residents.
Importantly, the bill approved by the Duma’s Committee on State Building and Legislation targets all domestic residents including citizens as well as foreigners, Russian and international organizations established in the country.
The listed entities will have to report their crypto transactions if a total amount of incoming or outgoing transactions exceeds 600,000 rubles ($8,100) on an annual basis.
Cryptocurrency and Russian market
Interestingly, the bill establishes penalties for violations like late reporting and providing inaccurate information. People who fail to provide information will have to pay the state up to 10% from incoming or outgoing transactions as a fine. Moreover, the suggested fine for non-payment or incomplete tax payment is 40% of the unpaid taxes according to the bill.
People should keep in mind that, the Russian Duma is expected to consider the new cryptocurrency legislation on February 17.
As a reminder, the Russian Federation enforced its crypto law “On Digital Financial Assets” in January 2021. The law prohibited local residents from making payments in cryptocurrencies. Moreover, the law provided legal status to the crypto industry in the country. However, it did not address certain areas of crypto assets. For example, taxation and mining, leaving the regulatory landscape relatively uncertain. For example, there is a certain level of uncertainty about crypto mining in the Russian Federation. As a reminder, the law does not provide a clear regulatory framework for the industry.
In this situation, it will be harder to develop the industry in the country. Russian authorities should cooperate with local as well as foreign experts to create a crypto-friendly environment in the country. The Russian government should pay more attention to cryptocurrencies. This way it will be easier to attract investors from all over the world. Moreover, it is desirable to find a balance between regulations and business interests.