Russia New Law Exempt VAT Tax on Crypto Mining and Transaction

Russia Federation Council has recently approved significant legislation aimed at regulating the taxation of cryptocurrency transactions and mining activities within the country. This new legal framework exempts these activities from Value Added Tax (VAT), significantly altering how Russia treats cryptocurrency.

Russia Overturn its Strict Taxation Law on Crypto

On November 27, 2023, the Federation Council, which serves as the upper house of the Russian parliament, endorsed a federal bill that lays out the groundwork for imposing taxes on cryptocurrency dealings. This legislation classifies digital currencies as property, thereby subjecting sales of cryptocurrency to a personal income tax rate ranging from 13% to 15%.

A key feature of the bill is its exemption of Russian cryptocurrency miners from VAT on any coins they mine, aiming to encourage mining activities in the country. The legislative process included the bill passing through three readings in the State Duma, the lower house of parliament, before receiving the Federation Council’s endorsement.

Furthermore, the bill is now poised for the signature of President Vladimir Putin, who would formally enact it into law. The provisions of the law will take effect following its official publication. In addition to taxation, the bill outlines specific requirements for crypto miners in Russia.

Obligatory Adhesion to Mining Activity

Government authorities will require them to report their mining activities to ensure compliance and facilitate tax collection. Failure to adhere to these reporting obligations could lead to penalties, with fines set at 40,000 rubles, equivalent to approximately $360.

Notably, services offered by officially sanctioned mining infrastructure operators will not incur taxes when conducted within the borders of the Russian Federation. The enactment of this tax regime comes at a time when the price of Bitcoin has reached unprecedented heights against the ruble.

The bill’s approval coincided with Bitcoin reaching approximately 11 million rubles, a significant milestone in its trading history against the Russian ruble. Bitcoin’s value surged due to its dramatic global rise, nearing $100,000, and the ruble’s corresponding depreciation against the US dollar.

The ruble’s struggles have been evident, particularly on November 27, when it hit a multiyear high against the US dollar, trading at 113 rubles per dollar. This reflects a 25% decrease in value over the past year, a trend that began after the Russian government declared a “special military operation” in Ukraine back in March 2022.