Individuals mining cryptocurrency can expect a higher tax burden than companies involved in the industry, a senior member of Russia’s parliament has said. While the mining of digital currencies is not yet regulated in Russia, the authorities are leaning towards recognizing it as an economic activity, which will allow the government to tax mining profits.
Profits from cryptocurrency mining in Russia may be taxed like securities
The personal income tax levy for individual crypto miners who withdraw their profits in the traditional financial system cannot be less than 15%, the head of the industry committee told the State Duma, said Vladimir Gutenev recently. The lawmaker added that the minimum tax rate for businesses or sole traders engaged in minting digital currencies as a business activity should be at least 6%.
Quoted by economic news portal Finmarket, Gutenev explained during a press conference that if cryptocurrencies are to be treated as securities in the Russian Federation, income tax must be paid when the coins are mined. are cashed.
The MP was referring to the mining rewards that can be received by both natural and legal persons. These payments for processing blockchain transactions are credited to cryptocurrency wallets. Miners can choose to convert digital coins into fiat currency.
The legal status of cryptocurrency mining and a range of other cryptocurrency-related activities has yet to be defined in Russia. A debate among government institutions is currently underway to determine Moscow’s regulatory approach.
Russia’s Central Bank has proposed a blanket ban on operations such as issuing, trading and mining private digital currencies it calls “currency surrogates”. However, the monetary authority found itself isolated, with the Ministry of Finance, other departments and regulators favoring legalization under strict rules rather than outright bans.
The federal government, which sides with the Department of Finance on the issue, has prepared a regulatory roadmap for the sector and added mining to the document. President Vladimir Putin recently pointed to Russia’s competitive advantages as a mining destination, while industry watchers doubted a ban on coin minting is practically possible.
Russia’s role in the crypto mining scene has grown since China launched a crackdown on the industry in May last year. A study by the Cambridge Center for Alternative Finance ranked Russia third after the United States and Kazakhstan in terms of mining capacity. As of August 2021, the energy-rich nation accounted for over 11% of the global bitcoin hashrate.
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