Taxpayers in Russia have started declaring incomes and profits from crypto transactions even before cryptocurrencies are legalized in the country, results from this year’s tax campaign show. The Finance Ministry has again clarified the applicable tax rules, while the State Duma is still fine-tuning the upcoming regulations.
Also read: Russian Railways Eyes Crypto for Tickets, Blockchain for Cargo
One Conscientious Taxpayer
A resident of the Altai Republic, a subject of the Russian Federation, has for the first time declared income obtained through purchases and sales of cryptocurrency, the Federal Tax Service reported on its website. The announcement is based on results from this year’s tax collecting campaign, the authority noted.
Taxpayers must declare their tax obligations no later than April 30 of the year following the taxation period, the Service reminded. The tax base for crypto transactions is calculated in rubles. It represents the excess amount of the total received from the sale of cryptocurrency over the total of the expenses for its acquisition. In the absence of special rules, residents dealing in crypto are expected to follow the established general procedures.
The clarification notice reflects recently issued instructions, which Minfin sent to regional tax inspectorates in a letter dated June 6. Noting the lack of dedicated provisions, the ministry said taxpayers could reduce their taxable crypto income by deducting the incurred and documented expenses for the purchase of crypto assets. In case of ambiguity, the tax legislation is interpreted in favor of the taxpayer.
Some Questions Remain
The question that many in the Russian crypto community are still asking is what the special crypto tax rules would look like. That should be decided by the Council of Ministers and the Central Bank of Russia (CBR) before July, 2018, as requested by President Putin. Officials have made different proposals but the ultimate decision depends on the legal of cryptocurrencies, which has yet to be determined.
The State Duma, the lower house of Russia’s parliament, has supported on first reading three draft laws aimed at regulating the country’s crypto sector. The bills – “On Digital Financial Assets,” “On Attracting Investments Using Investment Platforms” and “On Digital Rights” – should be adopted by the end of June.
Choosing the exact terms to define cryptocurrencies, however, has proved to be a difficult task. The chair of the parliamentary Financial Market Committee, Anatoliy Aksakov, told journalists this week that “digital money” and “digital currency” will be removed from the drafts and replaced with the legal concept “digital rights.” A similar comment was made earlier by Russian Prime Minister Dmitry Medvedev. The legal status of cryptocurrencies will directly affect the taxation of their transactions.
Tax Breaks for the Self-Employed
A new tax regime for self-employed Russians is expected to enter into force from July, next year. Its provisions will also affect those engaged in crypto-related activities, including miners and traders of digital assets, owners and clients of cryptocurrency exchanges. A survey conducted a couple of months ago showed that cryptocurrency is the main source of income for 12% of Russian crypto users.
As a preliminary estimate, Russia has all the prerequisites to become a crypto-friendly jurisdiction, when it comes to taxation. Income tax in the country is only 13%. According to an earlier communication by the Finance Ministry, Russians are expected to pay the same flat rate on their crypto-related incomes. The recommendation was issued in response to an enquiry filed in October, last year.
As part of the new tax regime, it has been proposed to adopt even lower rates for self-employed Russian residents – 3% for natural persons and 6% for corporate entities. These changes may be introduced in Russia’s regions first, as early as the beginning of 2019. In comparison, income tax rates in countries like Japan and France reach more than 50%.
Do you expect Russia to become a crypto-friendly country as far as taxation is concerned? Share your thoughts in the comments section below.
Images courtesy of Shutterstock.
Verify and track bitcoin cash transactions on our BCH Block Explorer, the best of its kind anywhere in the world. Also, keep up with your holdings, BCH and other coins, on our market charts at Satoshi Pulse, another original and free service from Bitcoin.com
The post Crypto Incomes Declared on Tax Returns in Russia appeared first on Bitcoin News.
from Bitcoin News https://ift.tt/2JQDMMv Crypto Incomes Declared on Tax Returns in Russia