A report indicates that cryptocurrency will be classified as property for tax purposes under proposed legislation. Profits from trading will be taxed at rates similar to securities transactions. Citing the country’s Finance Ministry, Russian news agency Interfax revealed on Monday that the Russian government has approved draft amendments to a law concerning cryptocurrency taxation and mining.
Under the proposed law, cryptocurrency would be treated as property for tax purposes. This means mining profits would be taxed at the same rate as other income, based on their market value at the time of receipt. However, miners may deduct mining-related expenses from their taxable income.
Balancing Interests
Trading profits will be taxed at rates equivalent to those for securities transactions, with individual rates capped at 15%, and no value-added tax will apply to cryptocurrency transactions. The changes aim to establish a common framework by requiring mining operators to disclose information about users of their infrastructure.
The decision to tax mining profits represents an effort to balance the interests of the industry and the government, according to Russia’s Finance Ministry. Interfax notes that the country’s first cryptocurrency tax law was introduced in December 2020 and passed its initial reading in 2021.
Last month, Russia’s tax agency proposed taxing miners’ unrealized profits. Additionally, the government has set a cap on electricity consumption for unregistered individuals mining bitcoin, limiting it to 6,000 kilowatt-hours per month.
