Cryptocurrency transactions in the Russian Federation are subject to current fiscal regulations

The State Duma does not plan to introduce a special tax regime for the crypto industry. Current fiscal rules will apply to all financial assets issued using digital technologies.

Taxation of cryptocurrencies depends on the definition itself in the legal field and is subject to the relevant legislation, says Anatoly Aksakov. One of the authors of the Bill on Digital Financial Assets (Cryptocurrencies), which is currently in the lower house of Parliament. In May, the State Duma approved the bill in the first reading. At the moment, the formed working group is preparing amendments for the second, autumn, reading of the bill. The document defines cryptocurrencies and tokens as digital financial assets and does not recognize them as legal means of payment. In addition, it defines the concept of mining as the activity of creating cryptocurrency or receiving it as a reward. It also establishes the procedure for conducting an initial coin offering (ICO). 

  The project does not imply the introduction of special taxation for cryptocurrency transactions. Therefore, the turnover of cryptocurrencies and mining in the Russian Federation falls under the existing Tax Code. Thus, the cryptocurrency activity of an individual is subject to 13 personal income tax, and a legal entity, depending on the type of business activity, can resort to a simplified taxation system (STS) or a general taxation system. 

The Ministry of Finance supports the position of the State Duma and also believes that the issues of the tax regime of the crypto industry need to be resolved after the status of cryptocurrency is legislated. The department once again emphasizes that cryptocurrency payments between individuals are not allowed and the only legal tender in the country is the ruble.

A precedent for considering cryptocurrency transactions based on the current Tax Code of the Russian Federation has already been created in the district court of Kostroma. Several people were detained in September last year for cashing out and selling cryptocurrency. Initially, the charge was brought under Article 172 Illegal banking activity. 

But during the investigation, the article had to be replaced with “Illegal business activity”. The prosecution was unable to classify transactions with cryptocurrency as banking activities, due to the fact that digital currency is not a means of payment by law. In essence, the accused were punished for conducting business activities without registration.