Russians Owe 13% Tax on Their Crypto Incomes
Russian citizens are expected to pay 13 percent tax on their crypto-related incomes. Amendments to the tax code are currently being prepared. The exact rates should be confirmed by the end of the year. However, lawyers have warned that even now citizens risk criminal prosecution if they fail to report gains from dealings with cryptocurrencies.
Also read: 0 to 50 percent ' Time to Pay Crypto Taxes in the European 'Union'
Tax Obligations Apply to All Residents, Including Foreigners
Lawmakers are finalizing the legislation that should regulate crypto-related matters in the Russian Federation. Two bills have been filed in the State Duma in the last couple of weeks. The draft law 'On Digital Financial Assets' legalizes blockchain technologies, mining operations and initial coin offerings. Another bill amends Russia's Civil Code to introduce terms like 'digital money' and protect the rights of crypto investors. The bills should be adopted by early summer but changes to the tax laws are expected to follow later.
In the meantime, private individuals in the Russian Federation are not free from the obligation to inform tax authorities on their income from cryptocurrency operations. The standard tax rate of 13 percent is applicable to gains from trading cryptos like bitcoin, according to a letter by the Finance Ministry. The clarification notice has been issued in response to a private request ('03-04-05/66994) filed in October last year.
Although the letter is just a recommendation, tax lawyers say it reflects the stance of the ministry and should be used as a reference before new rules are adopted, Kommersant reports. The income tax rate, and other crypto-related parameters of taxation will be officially confirmed with the amendments of the tax code. Russia's parliament and the Ministry of Finance are currently working on these changes expected to take effect by the end of the year.
Until that happens, Russian citizens are required to report crypto income on their tax returns and pay the regular income tax which has a flat rate of 13 percent. Foreign nationals present in the Russian Federation for at least 183 days in a year are treated and taxed as permanent residents. In all other cases the rate is doubled to 30 percent. Dividends are taxed at 6 percent (15 percent for non-residents).
Miners Can Pay Taxes as Individual Entrepreneurs or Legal Entities
The draft legislation, currently under review in the lower house of Russia's parliament, defines crypto mining as an 'entrepreneurial activity'. That means miners will be have to either register as individual entrepreneurs, or set up companies. In any case, they will be required to report their profits and pay their taxes. The applicable tax rates, and tax rights, depend on the type of registration they choose. Corporate profit tax in Russia is 24 percent.
Many aspects of crypto taxation need further clarification. Legal experts say that Russian tax officials lack the expertise necessary to address the matter adequately. The Federal Tax Service inspectors are struggling to understand how crypto exchanges work, and have no idea how to identify the owner of a cryptocurrency wallet.
At the same time, traditional regulations collide with the principles of anonymity and independence associated with cryptocurrencies. Nevertheless, individuals and businesses risk prosecution if they fail to report their incomes and gains from crypto-related activities. That's why tax lawyers advise both citizens and companies to pay their taxes on time.
Do you agree that tax authorities should first do their homework on cryptocurrencies before they tax crypto incomes' Share your thoughts in the comments section below.
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The post Russians Owe 13% Tax on Their Crypto Incomes appeared first on Bitcoin News.
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