The Federal Tax Service (FTS) in Russia has stated that citizens can pay taxes on their cryptocurrency earnings, even though tokens have no legal status in the country. This latest development adds to the confusion surrounding the government’s stance on cryptocurrencies. While the Central Bank is in favor of a complete ban on all crypto-related activities, other government ministries, such as finance, trade, and energy, have expressed a desire to legalize and regulate crypto. This conflicting approach has created a deadlock between these bodies for several years.

The Complexity of Crypto’s Legal Status

The legal status of cryptocurrencies in Russia remains uncertain, further complicated by the sanctions imposed on the country by the United States and its allies. In an attempt to de-dollarize and facilitate trade, some Russian firms have turned to cryptocurrencies for buying and selling goods. The finance ministry recently proposed a compromise that would effectively restrict everyone in Russia except miners from handling crypto. However, the FTS has added another layer of complexity by stating that crypto can be recognized as a form of property and declared on tax returns accordingly.

Paying Taxes on Crypto Earnings

The FTS has clarified that crypto earnings can be declared through two different methods. Firstly, individuals making profits from cryptocurrency can declare their earnings on crypto personal income tax declarations. Alternatively, they can utilize the simplified taxation system (STS). The FTS advises crypto traders to submit a declaration using existing documents by April 30, 2024. The income from the sale of cryptocurrency can be calculated by considering the documented costs of its purchase. It is important to note that tax calculations must be made in fiat rubles. Under the STS, crypto traders can calculate their earnings by determining the difference between their sales income and the purchase price of the cryptocurrency.

Despite the absence of a clear legal framework for cryptocurrencies in Russia, the FTS’s position is not unprecedented. Russian courts have previously ruled that crypto can be protected as a form of intangible property, thereby falling under existing property rights. The FTS acknowledges that the status of cryptocurrencies is not currently defined by law, but until this issue is resolved, the sale of cryptocurrencies can be considered as the sale of property.

The Russian tax body has asserted that citizens can pay taxes on their cryptocurrency earnings, presenting two methods for doing so. While the legal status of cryptocurrencies in the country remains uncertain, the FTS’s position aligns with previous court rulings and recognizes crypto as a form of property. This development adds to the complexity and confusion surrounding the government’s approach to cryptocurrencies, with different ministries expressing conflicting views. As the deadline for tax declarations approaches, crypto traders in Russia are advised to carefully consider their options and comply with the existing regulations.

Blockchain

Articles You May Like

US Senators call for DOJ investigation into Binance’s false statements to Congress
SEC Settles with Coinbase Insiders Involved in Insider Trading Scheme
Bitcoin’s Price Faces Uncertainty Amidst Economic Concerns and Regulatory Hurdles
Launchpad XYZ: A Comprehensive and User-Friendly Web3 Platform

Leave a Reply

Your email address will not be published. Required fields are marked *