Russia is stepping up efforts to regulate cryptocurrencies with a proposed 15% tax on income from cryptocurrency mining and trading.
On November 18, the Russian Ministry of Finance proposed a law amendment to apply a 15% income tax rate to all income from cryptocurrencies, including mining and trading. The proposal comes as the Russian government seeks to legalize and tighten control over the rapidly growing cryptocurrency sector.
According to the draft, the new tax system will reset the way taxes are calculated for mining activities, including income, costs, and infrastructure. Income from mined tokens will be taxed based on the market value at the time of receipt, while miners will be allowed to deduct operational costs.
Cryptocurrency will be classified as a taxable income asset, but cryptocurrency transactions will be exempt from value-added tax (VAT), similar to securities transactions. Infrastructure operators for mining will have to provide user information to the tax authority, although details regarding the reporting process have not yet been clarified.
Notably, the Federal Tax Service of Russia (FNS) has proposed taxing unrealized profits from mining. This means that miners may have to pay taxes even if they have not sold the tokens. The FNS is also considering implementing a two-tier tax system, increasing the complexity of mining operations in Russia. According to the new law, from October 28, 2024, the management of the mining registry will be transferred to the FNS, requiring industrial miners to register their activities.
In parallel with tax measures, Russia is also tightening regulations on cryptocurrency mining to address energy shortages. From November 1, 2024, only registered organizations or individuals will be allowed to mine, while individuals without legal entity status will have their monthly electricity consumption limited to 6,000 kWh. Additionally, a temporary ban on mining will be imposed in certain areas from December 1, 2024, to March 15, 2025, to alleviate pressure on the power grid during winter.
Meanwhile, Sberbank – the largest bank in Russia, has announced plans to test a payment system based on cryptocurrency. This is part of a broader strategy, including the pilot program for a digital ruble and discussions about issuing stablecoins.
