Russian lawmakers are not planning to reinvent the wheel and create a special tax regime for miners and cryptocurrency owners. Nevertheless, the existing norms of the Tax Code will apply to these categories of citizens. The tax legislation in this sphere, however, will be extended to miners and holders only after the adoption of the draft law on digital money, as Anatoly Aksakov, chairman of the State Duma Committee for Financial Markets, told Izvestia. Such a decision raises more questions than it gives answers. DeCenter tried to figure out what will be regulated by existing legislation, as well as how and when.
Old New Law
If the current taxation system really applies to miners and holders, then a 13 percent income tax will be levied on individuals and a tax corresponding to the type of business from legal entities.
At the same time, we should not exclude a special form of taxes for miners and owners of cryptocurrencies. If the government wants to introduce special forms of regulation, they can easily be created. "If they want to describe something separately for these types of businesses, they will do it. At the moment, we are not describing tax issues in any way. This means that the current Tax Code is effective for this type of business," said Anatoly Aksakov. The bill on cryptocurrencies is going to be adopted during the autumn Duma session.
What Awaits the Crypto Industry?
This innovation did not become something unexpected for crypto enthusiasts. Another question is how many players will leave the market after the adoption of the "new rules of the game." "The news of 13 percent is not entirely news. The question of taxes stood at the beginning of the year, and this figure also appeared in the discussions. Obviously, this is quite an adequate measure on the part of the authorities. People (and companies) are engaged, in fact, in entrepreneurial activities. They use resources, and they receive income. We cannot say whether this will affect the attractiveness of mining, as earnings depend on the value of the cryptocurrency," Pavel Matveev, CEO and co-founder of the Wirex crypto bank, commented to DeCenter.
It is unclear how this will affect the owners of cryptocurrencies. With miners, the situation is more or less clear. There it is possible to track unregistered miners by electricity costs, but it is unknown how to identify the income if they resist. "It's unlikely that all owners of cryptocurrencies will go to the official exchanges, which will receive a work permit in Russia to exchange their Bitcoins," Matveev said.
With crypto banks, the story is more interesting, as this definition is not even provided for by the draft law. The crypto bank itself is not the holder of a cryptocurrency. Instead, it provides the opportunity to store the cryptocurrency and exchange it for other currencies, including fiat. Plus, it is possible to use it for payments with merchants. "In this connection, a question may arise: how will the government build relations with these institutions? The most appropriate option is to provide the relevant authorities with access to information relating to the bank's clients, and the list of authorities and the procedure for provision must, of course, be provided in the law," explained the director of Wirex.
How Will the Taxes Be Counted and Who Will Be Considered?
The taxes themselves can be counted only in rubles, as this is stipulated by the current legislation. The rate should be determined by the official platform that received the license. If there are several such platforms, then this function can be taken on by the Central Bank, by analogy with the U.S. dollar. "The tax will probably be levied on those cryptocurrencies that can be traded directly with the ruble (the licensed platform will have to offer the purchase of the currency for rubles), and possibly also with other fiat currencies, followed by conversion to the Russian ruble at the rate specified by the Central Bank. The moment of profit can be both the receipt of a cryptocurrency into a cryptocurrency wallet, and the conversion of a cryptocurrency into a fiat currency," the expert concluded.
Obviously, the taxation of miners and holders is an expected phenomenon. The questions remain, however, how exactly will the regulation take place, will Russian lawmakers rely on the experience of other countries in the definition of the phenomenons within the crypto industry or introduce some other names and control algorithms?