Russian lawmakers recently approved a draft law that could possibly exempt digital asset issuers from making value-added tax payments. It has also established new tax rates on income earned through the sale of such assets.
Russia’s New Crypto Legislation
As reported by Reuters, the draft law was approved following second and third readings by members of the State Duma (Russia’s federal assembly) on Tuesday. It will reportedly apply exemptions of value-added tax to both digital asset issuers, and “information systems operators” that assist with issuing them.
Value-added taxes are applied to goods based on how much their value has increased at each stage of their production. According to the Inter-American Centre of Tax Administrations, almost no country applied a VAT tax to the exchange of virtual currencies as of late 2020.
Regarding income tax payments, crypto’s current tax rate in Russia is 20% – in line with other, standard assets. However, the draft law would reduce this tax to only 13% for Russian companies, and 15% for others.
The law still must be signed by both the upper house and President Vladimir Putin to become law.
Russia’s Crypto Stance
Russia’s attitudes towards crypto remain ambivalent. Regional authorities appear to hold varying opinions on digital assets.
Citing financial stability concerns, Russia’s central bank proposed banning cryptocurrencies altogether in January, likening them to “pyramid schemes” and as threats to sovereign monetary policy. However, this approach was rejected in short order by the Ministry of Finance, which deemed regulation a better option.
That said, the state has already completed its first reading on a bill that would ban digital assets for payment-specific purposes. The central bank’s position appears to be that cryptocurrencies can be a useful tool for international trade – but not for citizens.
The former position is appearing increasingly popular. A member of the State Duma claimed in March that Russia may begin accepting Bitcoin for international oil payments.
This was weeks after Russia was kicked out of the SWIFT payments system and saw $600 billion of its FX reserves seized by western nations. Some noteworthy figures including former BitMEX CEO Arthur Hayes and investor Bill Miller assumed this would be bullish for Bitcoin, by piquing Russia’s interest in the asset.
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