Russian cryptocurrency taxation criticised over terminology

The presidential council on codification and improvement of civil legislation did not back the government bill on taxing cryptocurrency transactions. The council’s press service reported.

The council members noted that the Civil Code of the Russian Federation still does not define the concept of digital currency, and digital rights are defined as contractual and other rights. The previously adopted law “On Digital Financial Assets (DFA)” treats digital currency as a kind of means of payment, but prohibits its use for paying for goods and services.

“Digital currency is not named explicitly as a digital right; the Civil Code of the Russian Federation does not have such an object, and allocating digital currency in the Law “On DFA” simply as property creates great legal uncertainty,” said the council chairman and head of the State Duma committee on state construction and legislation, Pavel Krasheninnikov.

Without specifying the range of objects that can be attributed to the category of digital currency, it is impossible to introduce its taxation, the council believes.

“Taxing an object not recognised by civil law as property is impossible and creates a risk of undermining the balance of public interests.”

Following the discussion, the document was sent for revision to implement a unified approach to regulating digital currency as a civil-law object not belonging to the category of digital rights.

Draft of the conclusion by ForkLog on Scribd

The government-approved draft law on taxing cryptocurrencies was submitted to the State Duma in early December 2020.

The document recognises digital currency as property and taxes income from digital currency transactions under corporate income tax or personal income tax (PIT).

The bill also imposes penalties on individuals and organisations that fail to report in a timely fashion their right to dispose of cryptocurrency, the turnover of funds and the remaining balance, if the amount of inflows or outflows for the year exceeds the equivalent of 600,000 rubles.

Earlier the State Duma’s Legal Department sent the tax amendments for revision due to arbitrary penalties.

Subscribe to ForkLog’s Telegram news: ForkLog Feed — the full news feed, ForkLog — the most important news and polls.