Russia is intensifying its efforts to regulate cryptocurrencies with a proposed 15% tax on income from cryptocurrency mining and transactions.
On November 18, the Russian Ministry of Finance proposed amending the law to apply a 15% income tax on all cryptocurrency-related earnings, including mining and transactions. This proposal comes as the Russian government seeks to legalize and tighten the management of 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, expenses, 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 operating costs.
Cryptocurrencies will be classified as taxable assets, but cryptocurrency transactions will be exempt from value-added tax (VAT), similar to securities transactions. Infrastructure operators will be required to provide user information to the tax authorities, although the details of the reporting process have not yet been clarified.
Notably, the Russian Federal Tax Service (FNS) has also proposed applying taxes to unrealized mining profits. This means that miners may have to pay taxes even before selling their tokens. The FNS is also considering implementing a two-stage tax system, further complicating mining activities in Russia. Under 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.
Alongside the tax measures, Russia is also tightening the regulation of cryptocurrency mining to address the issue of energy shortages. From November 1, 2024, only registered businesses or individuals will be allowed to mine, while unincorporated individuals will be limited to a monthly electricity consumption of 6,000 kWh. Additionally, a temporary mining ban will be implemented in certain regions from December 1, 2024, to March 15, 2025, to reduce the strain on the power grid during the winter season.
Meanwhile, Sberbank, Russia's largest bank, has announced plans to test a cryptocurrency-based payment system. This is part of a broader strategy that includes a pilot program for a digital ruble and discussions about the issuance of a stablecoin.
