In an important step towards successfully regulating digital assets in the country, Russian President Vladimir Putin has signed a law creating a new law legal framework for taxing Bitcoin mining and transactions, recognizing them as property and preparing for formal taxation.
Russia’s New Bitcoin and Crypto Tax Law
According to local media reportsdigital currencies, including Bitcoin, will be classified as property under the new law. This classification extends to currencies used for foreign trade arrangements within the Experimental Legal Regime (EPR) framework for digital innovation.
Notably, the law stipulates that mining and selling of digital currencies will be exempt from value added tax (VAT), which could encourage further investment and participation in the crypto market.
One of the law’s key provisions requires mining infrastructure operators to report to tax authorities on the users of their services cryptocurrency issuance. Failure to provide this information in a timely manner may result in a fine of 40,000 rubles ($380).
In terms of income tax implications, cryptocurrency obtained through mining will be categorized as ‘income in kind’, a term commonly used to describe it non-cash payments made in the form of goods or services.
The value of the mined cryptocurrency will be determined based on the prevailing market rates. This income will be subject to a progressive tax scale, allowing deductions related to mining costs.
25% tax rate from 2025
The law also outlines a two-tiered tax system for income generated from the acquisition, sale or other forms of circulation of cryptocurrency.
Income up to 2.4 million rubles ($22,600) will be taxed at a rate of 13%, while any income exceeding this threshold will attract a 15% tax. This income is included in this tax base such as income from securities, bank deposits and other financial sources.
For companies engaged in Bitcoin mining, a standard income tax rate of 25% will be applied from 2025. However, the legislation limits the tax regimes available to organizations and individual entrepreneurs (IPs) involved in cryptocurrency activities.
In particular, these entities will not be allowed to introduce a single agricultural tax, use a simplified tax system or benefit from the ‘Automated Simplified Tax System’. The patent system and self-employment regime will also not apply to Bitcoin mining and transactions.
The law will come into effect after its official publication, with some provisions subject to different timelines. Transitional provisions have also been included to facilitate the implementation of these regulations.
At the time of writing, the leading cryptocurrency is trading at $98,500 after a brief 7% correction earlier this week, moving closer to an all-time high of $99,500.
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