Russia Approves Tax Provisions for Bitcoin Transactions

On November 11, a government commission approved a draft amendment concerning the taxation of cryptocurrency transactions, as reported by Izvestia.

The original document was prepared in 2020 and passed its first reading in February 2021. Work on it resumed following the implementation of mining regulations.

Key Figures

The bill designates digital currency as property and proposes a separate calculation of the tax base. This is determined by the excess of the asset’s value over the costs of its purchase or mining.

Individuals selling cryptocurrencies will pay personal income tax at a progressive rate: from 13% to 22% for incomes exceeding 2.4 million rubles. Legal entities will be subject to profit tax — from 2025, this will increase from 20% to 25%.

Additionally, for the latter in the context of mining, a two-stage system is established:

• determining the value of cryptocurrencies upon receipt (calculated at the closing price on major exchanges that day and converted to rubles at the Central Bank’s rate on that date);
• accounting for value changes upon sale — companies pay for gains or deduct losses. Income from cryptocurrency sales at this stage is calculated at the actual sale price, but not less than 20% of its market value.

Taxpayers will be able to reclaim part of the tax paid on mining expenses if such costs were necessary and documented.

Cryptocurrency transactions will not be subject to value-added tax.

Reporting and Accountability

The current provisions of the document require individuals and legal entities to report transactions to tax authorities if the total inflow and outflow from cryptocurrencies exceed 600,000 rubles annually (equivalent).

Mining infrastructure operators are required to provide the control service with data on services rendered. Failure to report on time will result in a fine of 40,000 rubles.

The authorities aim to empower the tax service to request bank statements from individuals’ accounts used for cryptocurrency transactions if there are suspicions of legal violations.

In June 2023, the Ministry of Finance estimated the annual profit of Russian miners at 100 billion rubles. Under such conditions, taxation of the industry could potentially bring about 20 billion rubles to the budget.

External experts believe that the tax potential of mining, with balanced regulation, could reach 50 billion rubles annually after 2025.

Back in April 2023, more than 60% of BitOK service users reported tax authorities’ interest in their bitcoin transactions.