The Federal Tax Service (FNS) in Russia has announced plans to implement a tax system for crypto miners that involves taxation on unrealized gains. This means that miners may have to pay taxes on coins they have not yet sold. The plans were revealed by Alexey Katyayev, the head of the Interregional Inspectorate for the FNS’ “Largest Taxpayers” group, at a meeting of the Industrial Mining Association. While the FNS aims to apply a “classical system” to miners, no final decision has been made yet on the matter.
Katyayev outlined a two-stage tax system for crypto miners, where miners would be required to make advance payments on mined cryptocurrency once they receive coins in their wallets. The taxable event would occur once miners have the right to dispose of their cryptoassets. The second stage would involve miners moving the coins out of corporate wallets or selling them, with the obligation to pay tax on any profit generated from the increase in coin value.
Additionally, Katyayev mentioned that miners would be able to write off losses if the value of tokens decreased during the specified period. He also clarified that crypto mining would be exempt from value-added tax (VAT) in Russia because mined cryptoassets have no specific monetary value within the country’s legal framework. This exemption applies due to the restricted nature of crypto transactions to government-sanctioned sandboxes for international trade firms.
The FNS official also emphasized that individual miners would be subject to personal income tax on their profits. The forthcoming register of crypto miners in Russia will require detailed information such as company names, data center locations, energy sources, client lists, sources of mining rigs, electricity consumption, and the amount of crypto mined. While certain details will remain confidential for security reasons, the aim is to ensure maximum transparency in the industry.
Industry reaction to the tax news has been mixed, with some companies welcoming the measures as a way to enhance business activities and promote competition in the crypto mining sector. Oleg Ogienko, Deputy General Director for Communications at BitRiver, believes that the tax regulations will allow companies to operate more efficiently. Timofey Semenov, CEO of Intelion Data Systems, sees the new tax system and registry as tools for increasing transparency in the industry, which could pave the way for major players to enter stock exchanges.
According to reports, Russian crypto miners are expected to collectively pay up to $616 million in taxes annually. The government’s move to tax unrealized gains in the crypto mining sector signals a significant shift in regulatory approach towards digital assets in Russia. As the industry continues to evolve, miners and businesses will need to adapt to the changing tax landscape and comply with the new regulations to operate legally and sustainably in the market.
