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.
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…