Russia Officially Classifies Bitcoin As Property With New Legislation Signed By Putin

by

As a seasoned crypto investor with a keen eye for market trends and a soft spot for Russian politics, I find this news about Russia’s new Bitcoin and crypto tax law intriguing. Having weathered through the 2014 ruble crisis and the 2018 crypto winter, I’ve learned to appreciate the resilience of both the Russian economy and the digital currency market.

In a significant step forward for managing digital currencies within its borders, Russian President Vladimir Putin has enacted a law establishing a new system for taxing Bitcoin mining and transactions. This law treats Bitcoin as a type of property and paves the way for a formal tax structure to be put in place.

Russia’s New Bitcoin And Crypto Tax Law

Under the latest legislation, digital assets such as Bitcoin are considered a form of property. This categorization also applies to digital currencies used for international trade transactions within the Digital Innovation Experimental Legal Regime (EPR).

To clarify, this law means that the process of mining and selling digital currencies is not subject to Value-Added Tax (VAT). This exemption might encourage more investments and involvement in the cryptocurrency market.

One of the law’s key provisions requires mining infrastructure operators to report to tax authorities regarding the users of their services for cryptocurrency issuance. Failure to provide this information promptly could result in a fine of 40,000 rubles ($380).

When it comes to the impact on income taxes, mined cryptocurrencies are classified as “income in kind,” which is a term often used for payments that aren’t cash but rather come in the form of goods or services.

The value of the mined cryptocurrency will be determined based on prevailing market quotes. This income will be subject to a progressive tax scale, allowing for deductions related to mining expenses.

25% Tax Rate Starting In 2025

The law also outlines a two-tier taxation system for income generated from the acquisition, sale, or other forms of cryptocurrency circulation. 

Earnings up to 2.4 million rubles ($22,600) will be subject to a 13% tax rate, whereas any income surpassing this amount will attract a 15% tax. All these earnings, including those from securities, bank deposits, and other financial sources, will fall under the same tax bracket.

Beginning in 2025, corporations conducting Bitcoin mining operations will face a uniform income tax rate of 25%. It’s important to note that the legislation restricts the types of tax systems that can be used by organizations and independent professionals (IPs) participating in cryptocurrency transactions.

In simpler terms, these specific entities are not allowed to use a unified agricultural tax, a streamlined tax structure, or reap advantages from the “Automated Streamlined Taxation System.” Additionally, the patent system and independent business model won’t be applicable to Bitcoin mining activities and transactions.

The law will become active after its formal announcement, and some sections will start at different times. To help smoothly implement these rules, transitional guidelines have been added as well.

Currently, the top cryptocurrency is being traded at approximately $98,500 following a minor 7% adjustment this week, moving nearer to its record peak price of $99,500.

Read More

2024-11-30 16:41