This is what the rules might look like

In recent months, the confrontation between the Central Bank of Russia (CBR) and the country’s finance ministry on cryptography regulation has become the key regulatory plot for the Russian cryptographic community. Simultaneously, however, another important legislative development took place somewhat under the radar: negotiations around the modifications of the tax code which would make cryptocurrencies a class of taxable assets. Here’s how it went so far.

13% for individuals and 20% for companies

As head of the Duma Financial Markets Committee (the Lower Chamber of the Russian Parliament), Anatoly Aksakov told local media on April 7 that changes to the federal tax code concerning the crypto should pass by the end of the summer parliamentary session.

The legislation supported by the government includes an obligation to report digital asset transactions if their total exceeds 600,000 rubles, or about $ 8,000, per year and fines of up to 40% of the individual tax jump in the event of non-declaration. The bill adopted the first reading in February 2021, after which he remained stuck in the limbo for almost a year for unknown reasons.

Aksakov only mentioned the recent delay in the discussion concerning the tax amendments of cryptography, stressing the emerging task of Duma of the development of “anti-crisis policy” which put aside the cryptographic rules for a certain time.

The changes awaited their fate as the broader discussion on the cryptographic regulatory framework between the CBR and the Ministry of Finance followed. While the Central Bank defends the idea of ​​a direct ban on crypto trade and mining, the ministry offered its own vision of regulating rather than prohibiting industry. It seems that the CBR still maintains its restrictive position and that tax changes will be no exception. A CBR spokesperson said that “digital assets are used, among other things, to escape tax payments”.

However, estimates of potential federal federal tax revenue vary from 10 to 15 billion rubles, or about 122 to 181 million dollars to 20 billion rubles, or around $ 244 million. The proposed tax would be imposed solely on income – 13% on the personal income of individuals and 20% on legal entities ”. Qualified investors would benefit from a tax deduction in the amount of 52,000 or more rubles per year. It is unlikely that taxes apply to the assets accumulated by 2021, but will reach the cryptographic transactions of the residents of the Russian tax carried out in any jurisdiction.

Starting

“This is an initiative of the Federal Tax Service, with the support of the Ministry of Industry and Trade and a certain number of officials and former officials of the Ministry of Finance,” said Aleksandr Podobnykh, Director of Information Security of the Cryptocurrency Platform (SICP) digital security company (SICP).

Alexander Bychkov is the CEO of the Embly World Crypto Debit Card Supplier and pays his taxes in Singapore. Bychkov said the proposed tax changes were part of a greater image of the regulatory confrontation between the CBR and the Ministry of Finance. He thinks that the amendments will pass, opening “many doors for product development” in Russia.

The question remains whether Russian citizens holding digital assets – worth around $ 130 billion according to the government’s own estimates – will be ready to put online and if the Federal Tax Service (FTS) will have the technical capacity to collect taxes. Bychkov is not sure of this last point but sees no other choice for the authorities but to start somewhere:

“My opinion is that the Russian system cannot be really ready, but it has no other choice than to create infrastructures step by step. As a taxpayer and resident of Singapore, I can say that the tax legalization of the Singapore helps to be one of the most developed market economies, with one of the highest of GDP by Capita in the world.”

In the shadow of a greater fight

Podobnykh said that the collection of cryptographic taxes is not currently a huge problem. He commented:

“Since December 2021, when filing a income tax return, you can choose digital assets and indicate their profit.

As the two experts agreed, the process of institutionalization of cryptographic taxation through changes in the tax code does not have a specific meaning in the context of the dead end between the CBR and the Ministry of Finance on the fundamental approach to the regulation of digital assets. This complies with recent statements made by the Minister of Finance, Anton Soluanov, who stressed the secondary importance of the tax collection program compared to a more general regulatory framework.