The Russian Federation Council – the country’s upper house – has approved a groundbreaking bill on cryptocurrency tax. One of the key provisions is that the legislation imposes a maximum tax rate of 15% on Bitcoin (BTC) and other digital asset mining activities.
New cryptocurrency tax law coming into effect
Russia’s upper house of parliament has given the green light to the new landmark cryptocurrency tax law, which aims to promote a favorable regulatory environment for Bitcoin and other digital asset companies in the country.
The legislation was approved on November 27 and is now awaiting the signature of Russian President Vladimir Putin. After consent, the law will come into force as soon as it is officially published.
The bill imposes a maximum tax cap of 15% on all individual cryptocurrency transactions and mining activities, essentially aligning digital asset income with the tax rates imposed on income from securities transactions.
Bitcoin and other crypto miners must pay taxes ranging from 13% to 15% on their earnings. The bill states that income from mining activities will be taxed on the market value at the time of receipt.
In addition, the bill classifies digital currencies that are used for many purposes – including as a means of payment for services – as property. Notably, the bill exempts all crypto activities from value added tax (VAT).
Once it becomes law, Bitcoin and other crypto mining infrastructure operators in Russia will be required to share relevant customer information with local authorities. Failure to do so could result in fines of up to $360.
It is worth emphasizing that the bill does not impose any tax liability on services of authorized mining companies within the territorial borders of Russia. Crypto mining companies can also deduct operating expenses to reduce their overall tax liability.
Bitcoin reaches record high against the Russian ruble
The passage of the bill comes at a time when the Russian ruble is in free fall on global currency markets. Year-to-date (YTD), the ruble has depreciated by more than 17% against the US dollar.
This devaluation has helped Bitcoin reach an all-time high (ATH) against the ruble. BTC is trading above 10 million rubles at the time of writing, with YTD gains of over 200% against the struggling fiat currency.
Russia is actively using cryptocurrencies in an attempt to circumvent the sanctions imposed on the country since the start of the conflict in Ukraine. Key lawmakers spoke at this year’s BRICS summit in Kazan, Russia suggested Selling BTC to international buyers to effectively circumvent Western sanctions.
The same wayRussia expressed interest in adopting digital assets for cross-border payments in September. Earlier this year, President Putin signed a bill granting legal status to cryptocurrency mining in the country.
Russia is also facing an energy crisis and is forcing it to do so prohibit crypto mining in certain regions due to its energy-intensive nature. BTC is trading at $95,162 at the time of writing, down 0.9% in the past 24 hours.
Featured image from Unsplash.com, charts from CoinGecko and TradingView.com