• The Russian finance ministry has launched a fresh attempt to tax crypto miners in a bid to surmount 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.
• Legislative changes to the tax code would require Central Bank and parliamentary approval, however mining is currently not classified as an entrepreneurial activity and therefore cannot be taxed.
The Russian finance ministry has recently made a new effort to tax crypto miners, in an attempt to overcome the hurdles thrown up by the nation’s Central Bank and law enforcement agencies. This comes almost a year after the ministry first tried to regulate the crypto mining sector, with industrial players pushing Moscow to “legalize” their operations. Energy players are also pushing for official approval on their projects, which would allow them to mine tokens using surplus energy and associated gas.
The finance ministry has expressed its intent to use the nation’s tax code regulations in order to bypass the impasse. It believes that it’s “fair to levy a tax on profits received from the mining of cryptoassets”, and that the existing code contains all the necessary provisions to allow them to include crypto miners in their taxation system. The precise form of taxation, however, is yet to be determined and will be contained within the framework of a draft law on crypto mining, which is currently being discussed.
Despite the ministry’s efforts, the Central Bank and law enforcement agencies are still hesitant to give the green light. The Central Bank is concerned that allowing miners to sell their coins on overseas exchanges will lead to money laundering and is thus pushing to prevent them from “entering” the Russian economy. Law enforcement officials are also concerned about the same issue.
At the moment, mining is neither legal nor illegal in Russia, and since it is not yet classified as an entrepreneurial activity, it cannot currently be taxed. Legislative changes to the tax code will require approval from the Central Bank and parliament, however, the finance ministry is determined to not let the stalemate drag on and is pushing for a resolution that will be beneficial for all parties.