Russian Parliament Clears Draft Bill That Exempts Digital Assets, Crypto Issuers From VAT

The legislation concerns business operations with cryptocurrencies and tokens.

By Shomik Sen Bhattacharjee | Updated: 29 June 2022 18:31 IST

Russian Parliament Clears Draft Bill That Exempts Digital Assets, Crypto Issuers From VAT

Photo Credit: Unsplash/ Mohd Azrin

The crypto tax law was initially submitted to the lower house of the Russian parliament in mid-April

Highlights

The tax relief extends to IT systems operators
The current rate on transactions is 20 percent
The crypto tax law was first submitted to the State Duma in mid-April

The Russian parliament has rolled out approval on a draft law proposing a tax relief on issuers of digital assets and cryptocurrencies in the country. Approved on second, third, and final reading in the State Duma, the lower house of Russian parliament, the legislation clarifies various aspects of the taxation of cryptocurrencies, as DFA (digital financial assets) is currently the main term in Russian law that applies to them. A new law "On Digital Currency" should expand the legal framework and definitions for crypto assets this fall.

As per a report by Reuters, the tax relief will also extend to information systems operators who would be involved in issuing them. Essentially, Russian authorities have not only cancelled VATs payments for crypto users, the authorities have also rolled out new tax laws, adjusting the tax rates on income earnings that are related to the sale of digital assets.

As things stand, the tax rate on transactions is 20 percent, which also applies for standard assets. However, the new law would see tax rates declining to 13 percent for Russian companies and 15 percent for foreign ones.

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The report, however, does reveal that the draft law is yet to be fully implemented and become law as it is yet to be reviewed by the upper house and signed by President Vladimir Putin.

The crypto tax law was initially submitted to the State Duma in mid-April and passed on first reading the following month. It was also approved by the parliamentary financial market and new legislation committees. At the time, legal experts were quoted as noting that the tax rules do not apply to private crypto holdings.

Russian officials have been working this year to comprehensively regulate the country's crypto space. The adoption of the digital currency law, which was proposed by the Ministry of Finance in February, has been delayed by ongoing discussions on the future legal status of decentralised cryptocurrencies like Bitcoin.

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Will crypto tax hurt the industry in India? We discuss this on Orbital, the Gadgets 360 podcast. Orbital is available on Spotify, Gaana, JioSaavn, Google Podcasts, Apple Podcasts, Amazon Music and wherever you get your podcasts.

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