Finance Ministry representative explains taxation in the cryptocurrency space

Director of the financial policy of the Russian Ministry of Finance, Ivan Chebeskov, explained how taxation of cryptocurrency operations and mining could function in Russia.

In regards to mining, a variety of taxation options is being discussed, although the following approach is mostly agreed upon: mining will be taxed when the cryptocurrency is converted to fiat. During a recent round table about cryptocurrencies, mining, external economic activity, payments and conversions into fiat, Chebeskov stated that there would be multiple incentives to convert crypto into fiat during the taxable period when it was mined. The round table was organised by ICC Russia.

According to Mr. Chebeskov, people should not be able to mine and save crypto for years without converting it into fiat or paying any taxes.

Chebeskov stated that taxation of cryptocurrencies and operations involving them would be taxed in the same manner as securities: with one’s income being taxed. For natural persons it will be a part of income tax, while juridicial persons will have to pay corporate tax. For example: a person buys some crypto for 300₽ and sells it for 500₽, in this instance the tax will be paid from the 200₽ income. It is the standard taxation method.

Chebeskov also stated that the bill, which is being worked on by the Russian Finance Ministry, would define a mechanism for cross-border payments in crypto, however, businesses would able to decide how and with whom the transactions would be made.

According to Chebeskov, current cryptocurrency payment systems are outdated. The sanctions Russia is currently facing are, in essence, an incentive to use the digital currency technology, it could even be used in settlements with other countries. And this is just one possible way of utilising cryptocurrencies and digital financial assets.

The Ministry of Finance is currently working on a bill, that would define the mechanisms for possible cryptocurrency transactions with other countries. Currently, the Central Bank and the Finance Ministry have disagreements on the topic of cryptocurrency regulation, however, when it comes to regulating mining, both sides mostly agree. There are multiple variants of the bill being discussed by the Central Bank and the Ministry of Finance. Mr. Chebeskov stated that the two institutions could agree on regulation of cryptocurrency and mining this year. It has to be noted that the Russian government ordered to provide possible cryptocurrency regulation options by the end of 2022. In the coming days the Finance Ministry will actively discuss all variants of the bill to regulate mining and crypto.

Mr. Chebeskov also added that the current version of the bill could regulate both mining and crypto trading in Russia. The mining of cryptocurrencies is considered a different area for regulation.