Law on taxation of cryptocurrencies adopted in first reading, expert comments

Earlier this week, the State Duma’s Budget Committee recommended that the lower house of the Russian parliament, in the first reading, adopt a draft law on the introduction of taxes for holders of bitcoin and other cryptocurrencies.

As you might expect, the draft law on taxation of cryptocurrencies was adopted by the State Duma in the first reading on February 17. The document amends the Tax Code and obliges Russians to inform the tax authorities about the possession of digital currencies if the amount of transactions on them per year exceeds 600 thousand rubles, writes RBC Crypto.

The draft amendments to the Tax Code were submitted to the State Duma by the government on December 1, 2020. This document was adopted by the deputies in the first reading with practically no changes.

Legislators have decided not to take into account the comments made in the conclusion of the legal department of the parliament, and are probably going to work on it before the second reading, says Dmitry Kirillov, senior lawyer of tax practice at Bryan Cave Leighton Paisner (Russia) LLP.

“The remarks, in my opinion, deserve attention – for example, a draconian 40% fine for non-payment of tax on transactions with digital currency, uncertainty in taxation of digital financial assets, the introduction of the obligation to report on the availability of cryptocurrency and transactions with it, although this is a right under the CFA law. … I hope the bill will be finalized by the second reading, ”Kirillov suggested.

The submitted bill does not contain any preferences and benefits for participants in the crypto market, which were promised a few years ago, added Sarkis Darbinyan, managing partner of the law firm Digital Rights Center. On the other hand, liability and fines are provided for any actions related to non-declaration of cryptocurrency, incorrect declaration, failure to submit a declaration.

“From the point of view of the further development of the digital economy, this is unlikely to contribute to the subsidence of Russian traders, projects, companies working in the field of distributed technologies in Russia,” he suggested. One can state the consistent movement of the state towards complete control over the circulation of digital currency in Russia, says Moscow Digital School expert Efim Kazantsev.

Kirillov from Bryan Cave Leighton Paisner explained that the first reporting year is 2021, so reports will need to be submitted by April 30, 2022. The bill says that it is necessary to declare cryptocurrency if the amount of receipts or write-offs of digital currency exceeds 600 thousand rubles. This means that when conducting only incoming or outgoing transactions in the amount of 600 thousand rubles, it is necessary to report. If there were incoming transactions for 300 thousand rubles. and for the same number of outgoing calls, there is no such need, the expert concluded.

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