19 Sep 2022 20:03

Cryptocurrency mining could be taxed at stage of transfer of digital assets into fiat funds - Chebeskov

MOSCOW. Sept 19 (Interfax) - It makes sense to tax cryptocurrency mining at the moment digital assets are transferred into fiat funds, but providing incentives for miners to transfer funds in the tax period when such currencies were issued by them, head of the Finance Ministry's Financial Policy Department Ivan Chebeskov said while speaking at an ICC Russia round table titled "Cryptocurrencies in foreign economic activity: mining, payments, fiat transfer."

"When it comes to mining, different variations of taxation are being discussed, but in general the approach on which there is some consensus is that mining should be taxed when digital currencies are transferred into fiat funds. But perhaps, with some incentives to transfer into fiat in the tax period when this currency was mined," he said.

There should not be cases when "a miner accumulates currency and does not pay taxes for years, simply by not transferring funds into fiat," Chebeskov said. "Perhaps some incentives are needed, or, on the contrary, disincentives for holding cryptocurrency for miners," he said.

In general, speaking about taxation of digital currency transactions, the head of the Finance Ministry department said that the approach is the same as with securities: levying tax on income, in the case of individuals as part of personal income tax, for legal entities - profit tax. "That is, if you bought digital currency, say, for 100 rubles, and sold for 200 rubles, you pay tax on 100 rubles. This is a fairly standard approach in this vein," he said.

Russian Prime Minister Mikhail Mishustin instructed the relevant ministries and the Central Bank to coordinate positions on the legislative regulation of cryptocurrency mining by December 19.

Earlier, the New People faction submitted a draft bill "On mining in Russia" to the State Duma, describing the basics of regulation of cryptocurrency mining in the domestic jurisdiction, but without specifying the taxation procedure, requirements for data centers and mining operators. The document did not receive backing from the Digital Ministry, the Economic Development Ministry, the Federal Tax Service, the Ministry of Justice or Rosfinmonitoring. The Finance Ministry, in turn, conceptually supported the ideas on regulating mining laid out in the document, but provided a number of comments, and also pointed to the fact that the government has a draft federal law "On Digital Currency", prepared by the ministry, which also includes provisions governing mining.

The main controversial issues in the regulation of mining concern the taxation procedure, financial requirements for data centers and mining operators. There are also disputes about how to exchange mined cryptocurrency into fiat money (rubles) and the legalization of the process.