• The Russian Finance Ministry has made a fresh attempt to tax crypto miners in order to overcome obstacles thrown up by the nation’s Central Bank and law enforcement agencies.
• The ministry hopes to evade the impasse by using the nation’s tax code regulations.
• The precise “form of taxation” is as-yet undecided and will be contained “within the framework of” a much-delayed draft law on crypto mining.
The Russian Finance Ministry is making a renewed effort to tax crypto miners in order to surmount the obstacles put up by the Central Bank and law enforcement agencies. The ministry is hoping to circumvent the impasse by utilising the nation’s tax code regulations. Although the precise form of taxation is yet to be determined, it will be included in the much-delayed draft law on crypto mining.
The ministry’s attempt to regulate the crypto mining sector has been ongoing for almost a year. Industry players have been pushing Moscow to “legalise” their operations, while energy firms are interested in projects that could see them mine tokens with surplus energy and associated gas. However, the Central Bank and law enforcement agencies have blocked the move. The former has asked miners to sell their coins on overseas exchanges to prevent them from entering the Russian economy, while the latter are wary that this could lead to money laundering.
In an effort to overcome this, the Finance Ministry has declared that it “considers it fair to levy a tax on profits received from the mining of cryptoassets.” Amendments to the tax code would require Central Bank and parliamentary approval, but the ministry believes that the existing code contains all the necessary provisions to include crypto miners.
At present, mining is neither illegal nor legal in Russia. As mining is not classified as an entrepreneurial activity, it cannot be taxed. The draft law is still under discussion, though the ministry is determined not to allow the stalemate to drag on.
Ultimately, the Finance Ministry is intent on taxing crypto miners in order to obtain more revenue, while also allowing industry players to operate within the law. The exact details of the taxation are yet to be decided and will be included in the draft law on crypto mining. It remains to be seen whether the ministry will be successful in its endeavour, or if it will be once again thwarted by the Central Bank and law enforcers.