Russian Approves Bill for New Tax Framework for Crypto Transactions

• Under the newly passed law, digital currencies, including those used in experimental legal regimes, are classified as property within the Russian Internal Revenue Code. 
•  It stipulates that crypto mining will be permitted only for registered individual entrepreneurs and organizations

Russia’s Federation Council has passed a significant new bill that outlines a taxation framework for digital currencies, following a similar approval in the State Duma. The law imposes a 13%–15% personal income tax on crypto sales.

As per the bill, digital currencies, including those used in experimental legal regimes, are classified as property within the Russian Internal Revenue Code. The bill recognizes digital currency as property, including those used for payments under Russia’s experimental legal framework for crypto transactions. This removes the need for value-added tax (VAT) on digital currency mining and sales transactions, which should reduce the financial burden on participants in the sector.

Additionally, services provided by organizations facilitating transactions within these experimental regimes will also be exempt from VAT. Under the new legislation, Russia’s mining infrastructure operators are mandated to disclose relevant information about the provision of crypto-mining services to local authorities. Failure to do so will result in a hefty fine of  $360.

A key provision of the bill requires operators of mining infrastructure to report data on individuals using their systems to the tax authorities. Under the legislation, mining income will be recognized as taxable and subject to personal income tax.

The rate for most individual miners will remain at 13%, but for earnings exceeding 2.4 million rubles per year, the rate will increase to 15%, effective starting in 2025. Businesses involved in mining will also pay corporate income tax at the standard rate.

The legislation also addresses certain operational restrictions within the crypto-mining sector. It states that crypto mining will be permitted only for registered individual entrepreneurs and organizations.

Non-entrepreneurial miners will be limited to using a maximum of 6,000 kWh of electricity per month. In response to ongoing electricity shortages, the government plans to impose temporary mining bans in certain regions starting December 1, 2024, which will remain in place until March 2025. The legislation awaits the signature of President Putin to be put into force.

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