Russia Implements Two-Stage Income Tax System for Crypto Miners

Cryptocurrency miners in Russia will soon face the same income tax regulations as other industries.

The proposed taxation system is structured to calculate tax liabilities based on when miners can dispose of their mined cryptocurrency.

According to Alexey Katyayev, head of the Interregional Inspectorate for the Largest Taxpayers No. 7 of the Federal Tax Service (FTS), the payment will occur in two stages. During the first stage, termed “payment of an advance on mined cryptocurrency,” the tax base begins once the cryptocurrency is credited to the miner’s identifier address. Katyayev said that miners can trigger tax calculations even if they keep the mined crypto in a pool without moving it.

Taxation begins in the second stage when the cryptocurrency either leaves the identifier address or when a miner sells it. If the value of the cryptocurrency has increased since the first payment, the miner must pay tax on the profit. Conversely, if the value decreases, miners can record this as a loss.

Katyayev emphasized that the Federal Tax Service recognizes the narrow tax base for mining operations. “If your company is engaged in the production of, say, cast iron frying pans and mining, losses from mining cannot be transferred to the production of frying pans, and losses from the production of frying pans cannot be transferred to losses from mining,” he said.

Russia’s New Tax Regulations for Crypto Mining

Cryptocurrency mining will not incur Value Added Tax (VAT) since mined cryptocurrencies are not used within Russia. Katyayev noted that this aligns with judicial practice, affirming that such activities should not incur additional taxation. Companies will follow a standard profit tax model, while individuals will be responsible for personal income tax.

As part of the regulatory framework, the Federal Tax Service will establish a comprehensive registry to monitor mining activities, including operators, miners, and the mined cryptocurrency. Katyayev stated that companies can submit relevant information through the tax service’s website, nalog.ru. Public information from the registries will also be accessible online.

The registry for mining infrastructure operators will include basic information such as company names, data center locations, electricity sources, and client details. The miners’ registry will contain disclosures about their operations, equipment, and compliance with legal import regulations. However, the third registry, detailing mined cryptocurrency and address identifiers, will remain confidential to protect sensitive information.

People expect the Federal Tax Service’s oversight of income, expenses, and tax payments to enhance transparency in the mining sector.

As per Kommersant, Russia is the second-largest producer of cryptocurrencies in the world. “Russia has risen to second place in the world in cryptocurrency mining. The US remains the leader, but uncertainty in cryptocurrency regulation there could trigger a new redistribution of the market.

However, Russia has not yet developed a legal framework for miners, experts emphasize. In addition, the risks of sanctions are growing both for Russian players and their counterparties abroad,” it said.

Gairika holds positions in BTC. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Magazine and The Shib Daily are the official media and publications of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.

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