The Russian government is preparing to exempt cryptocurrency trading and custody services from value-added tax (VAT) as part of a major push to regulate currency operations in the country.
The necessary legislation has already been drafted. It also determines taxes on profits generated by entities engaged in these activities and on the personal income of digital currency traders.
Russia will not collect VAT on cryptocurrency trading and storage services
The Ministry of Finance in Moscow has put forward amendments to the Russian tax code to address taxes on various cryptocurrency transactions for both companies and individuals.
Local media revealed that the main proposal is to exempt services provided by cryptocurrency exchanges and digital asset warehouses from VAT.
The exemption will also cover other ancillary services related to the issuance and trading of digital currencies, according to a source familiar with the draft law.
The tax will not be imposed on “digital rights proving exclusive monetary claims” either, the official who chose to remain anonymous told the Interfax news agency.
The full list of exemptions has not yet been finalized by the Ministry of Finance, cryptocurrency news outlet Bits.media noted in a report on Saturday.
Profits from cryptocurrency exchanges and custody platforms will be subject to corporate taxes under rules similar to those for professional stock market participants.
This includes revenue from commissions charged, fees for storing digital assets and providing intermediary services, as well as other operating income.
The legislation does not provide for preferential treatment in these cases, and Russia intends to apply its standard tax systems in general, taking into account some details.
The draft law introduces a new article regulating the procedures for collecting taxes on personal income from the sale or other disposal of cryptocurrencies, including the exchange of fiat currencies.
Russian cryptocurrency traders will be able to reduce their tax base through acquisition costs and fees paid to exchanges, warehouses, brokers and banks, and deduct any taxes paid upon receipt. Document more details:
“When income is received from cryptocurrency transactions, expenses are recognized in the form of acquisition costs at a first-in, first-out rate.”
The draft law allows for the compensation of profits and losses during one tax period, but will not allow losses to be carried forward to future periods.
Intermediaries such as brokers and trustees will be responsible for withholding and remitting the tax to the state budget if the income is deposited into an account with them.
Restrictive regulations to limit cryptocurrency trading in Russia
The cryptocurrency market in Russia rarely receives tax breaks, while restrictions are more common, the financial technology portal VC.ru noted in a post about the upcoming regulations.
In fact, the Russian government is preparing to legalize cryptocurrency transactions, including trading and investing, under strict rules and restrictions.
This week the federal government foot A package of draft laws, the most important of which is: invoice “On Digital Currency and Digital Rights,” with the Duma, which is expected to adopt them by July 1.
While they expand access to crypto assets to non-qualified investors, ordinary Russians who fall into this category will be allowed to purchase no more than $3,700 worth of coins annually.
Furthermore, they will only be allowed to purchase the largest and most liquid cryptocurrencies such as Bitcoin, Ethereum and a few others whitelisted by the Russian Central Bank.
Furthermore, all cryptocurrency transactions will be routed through service providers licensed under Russian law and regulations.
Trading on global stock exchanges will be almost impossible, unless done through a local broker or using foreign bank accounts.
Another recently introduced bill would require Russian residents to report their wallets hosted by foreign cryptocurrency platforms to the Federal Tax Service (FNS). I mentioned By Cryptopolitan.
