Russian taxpayers declare income from cryptocurrencies

Taxpayers in Russia are already declaring incomes and profits from crypto transactions even though cryptocurrencies have yet to legalised in the country, results from this year’s tax campaign show.

The Federal Tax Service reported the news on its website while reminding taxpayers to declare their tax obligations by April 30 of the year following the taxation period. The rate of income tax levied on Russians is relatively low at 13%.

While the lower house of Russia’s parliament the State Duma works on completing its regulation of cryptocurrencies, which is likely to involve their reclassification as ‘digital rights”. Meanwhile, those dealing in crypto are expected to follow established general procedures. The tax base for crypto transactions is calculated in rubles and represents the net amount received from the sale of a cryptocurrency after deducting expenses incurred in its acquisition.

Awaiting clarification
The Ministry of Finance of the Russian Federation wrote to regional tax inspectorates on June 6 and acknowledged the lack of specific instructions for dealing in cryptocurrencies. 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 favour of the taxpayer.

Any more specific tax rules for dealing in cryptocurrencies should be decided by next month by the Council of Ministers and the Central Bank of Russia (CBR), as has been requested by President Vladimir Putin. Three draft bills drafted by the State Duma and aimed at regulating Russia’s crypto sector are expected to be adopted by the end of this month.

A new tax scheme for self-employed Russians due to be introduced in July 2019 will cover the activities of those working in the cryptocurrency sphere, such as miners and traders. A recent poll suggested that no less than 12% of Russians use digital coins as their main source of income. The State Duma has proposed lowering their tax rates to just 3% for individuals and 6% for legal entities.

Source: http://knowledge.wharton.upenn.edu/article/the-real-impact-of-sanctions-on-russia/