Russia’s Federation Council Approves Cryptocurrency Taxation Legislation
In a significant move for the cryptocurrency sector, Russia’s Federation Council, the country’s upper house of parliament, has officially sanctioned a groundbreaking bill concerning the taxation of digital assets. This legislation introduces a top tax rate of 15% on operations related to Bitcoin (BTC) and other virtual currency mining activities.
Implementation of New Cryptocurrency Tax Regulations
The Russian Federation’s upper house of parliament has endorsed a pivotal cryptocurrency tax law designed to create a favorable regulatory framework for Bitcoin and other digital asset enterprises operating within the nation’s borders.
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The approval was granted on November 27th, and the bill is now awaiting the signature of Russian President Vladimir Putin. Upon receiving presidential assent, the law will be enacted following its official publication. The legislation sets a maximum tax rate of 15% on individual cryptocurrency transactions and mining activities, effectively aligning the tax treatment of digital asset income with that of securities transactions.
Under the new law, Bitcoin and other cryptocurrency miners are required to pay taxes ranging from 13% to 15% on their income. The bill stipulates that earnings from mining operations will be taxed based on their market value at the time of receipt. Additionally, the legislation categorizes digital currencies used for various purposes, including as a payment method for services, as property. Importantly, the bill exempts all cryptocurrency activities from value-added tax (VAT).
Once enacted, operators of Bitcoin and other cryptocurrency mining infrastructures in Russia will be obligated to provide relevant client information to local authorities. Non-compliance may result in fines of up to $360. It’s noteworthy that the bill exempts authorized mining operators within Russia’s territorial limits from tax liabilities on their services. Moreover, crypto mining businesses are allowed to deduct operating expenses to minimize their overall tax burden.
Bitcoin Reaches New Heights Against the Russian Ruble
The approval of this bill coincides with a period of significant devaluation for the Russian ruble in global currency markets. Since the beginning of the year, the ruble has depreciated by over 17% against the US dollar.
This currency devaluation has propelled Bitcoin to reach unprecedented levels against the ruble, with BTC trading above 10 million rubles at the time of writing. Year-to-date, Bitcoin has seen gains exceeding 200% compared to the weakening fiat currency.
Russia has been actively exploring the use of cryptocurrencies as a means to circumvent sanctions imposed on the country following the Ukraine conflict. During the recent BRICS summit held in Kazan, Russia, prominent lawmakers suggested selling Bitcoin to international buyers as a strategy to effectively bypass Western sanctions.
Furthermore, Russia expressed interest in leveraging digital currencies for cross-border transactions in September. Earlier this year, President Putin enacted legislation that grants legal recognition to cryptocurrency mining activities within the country.
Amidst these developments, Russia is also facing an energy crisis, leading to restrictions on cryptocurrency mining in certain regions due to its high energy consumption. At present, Bitcoin is trading at $95,162, reflecting a 0.9% decline over the past 24 hours.
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