Emily Walker
In a significant step towards regulating digital assets, Russian President Vladimir Putin has enacted a law that establishes a legal framework for taxing Bitcoin mining and transactions, officially recognizing them as property and paving the way for formal taxation.
New Taxation Legislation for Bitcoin and Cryptocurrencies in Russia
As per local media reports, the new law categorizes digital currencies, including Bitcoin, as property. This classification applies to currencies used in foreign trade transactions within the Experimental Legal Regime (EPR) focused on digital innovation.
Importantly, the law indicates that mining and selling digital currencies will not be subjected to value-added tax (VAT), which may encourage increased investment and engagement in the cryptocurrency market.
A crucial aspect of the law mandates that operators of mining infrastructure must report to tax authorities concerning the users engaging with their services for cryptocurrency issuance. Failing to submit this information on time may lead to a fine of 40,000 rubles (approximately $380).
When it comes to income tax, cryptocurrencies acquired through mining will be viewed as “in-kind income,” a label typically reserved for non-monetary payments made in the form of goods or services.
The value assigned to the mined cryptocurrencies will be based on current market rates. This income will fall under a progressive tax structure, allowing for deductions related to mining-related expenses.
Tax Rates Set for 2025
The legislation defines a two-tier tax system for income derived from acquiring, selling, or transacting cryptocurrencies.
Income up to 2.4 million rubles ($22,600) will incur a tax of 13%, while any income exceeding this limit will be taxed at 15%. These earnings will be combined into the same tax framework as income from securities, bank deposits, and other financial instruments.
For corporations involved in Bitcoin mining, a fixed income tax rate of 25% will take effect starting in 2025. Nonetheless, the law restricts the tax regimes available to organizations and individual entrepreneurs (IPs) engaged in cryptocurrency activities.
Such entities will not have the option to use a single agricultural tax, implement a simplified taxation system, or benefit from the “Automated Simplified Taxation System.” Additionally, the patent system and self-employed regime will not apply to Bitcoin mining and related transactions.
This legislation will come into force upon official publication, with certain provisions rolling out at varying times. Transitional rules have been incorporated to ease the implementation of these new regulations.
Currently, Bitcoin is trading at $98,500 after experiencing a slight 7% dip earlier in the week, edging closer to its all-time high of $99,500.
Image contributed by DALL-E, data sourced from TradingView.com