Сryptocurrencies should be regarded as property for tax purposes – Russia

• Russian lawyers develop taxation system for digital assets.
• Cryptocurrency miners will have tax benefits.

According to the group of Russian lawyers, the taxation regime for digital assets shall be developed before the corresponding legislation comes into force. Otherwise, operations with cryptocurrencies may become a headache and cause numerous problems for taxpayers. Such conclusions were made by the Russian Committee for Digital Economy Legal Support, the local media outlet Kommersant reports.

The layers believe that it is necessary “to classify operations with cryptocurrency as an object of taxation.” They proposed to give all digital tokens the status of property rights.

Apart from that, the experts suggest that taxpayers should be able to decide how to reflect their assets in tax receipts, provided that they follow the principle of consistency of the source of the cryptocurrency exchange rate at the time of receipt and disposal”. Basically, it means that cryptocurrency owners will have to use the exchange rate of the same platform when they reflect the purchase and selling of their assets. It will help to avoid tax abuse.

Also, the lawyers discussed the mechanisms of using cryptocurrency as a monetary measure and proposed a system of so-called cross-rates. For example, the exchange rate of tokens issued outside the platforms licensed on the territory of the Russian Federation, can be determined first against Bitcoin, then converted into US dollars, and then into rubles (through the official dollar exchange rate set by the Central Bank).

The panelists also proposed to exempt digital rights transactions from VAT and not to levy income tax on citizens selling digital assets after a year of continuous ownership.

The meeting participants also discussed the taxation of miners. They proposed to apply the patent system to individual entrepreneurs engaged in cryptocurrency mining, as well as to disclose to the tax authorities the details of the entrepreneur’s crypto wallet (to make sure that they are eligible for tax benefits).

In June, the head of the State Duma Committee on the Financial Market, Anatoly Aksakov, said that they could impose administrative responsibility for mining cryptocurrency based on public blockchains.