Tax amendments for cryptocurrency owners in Russia to be finalised due to arbitrary penalties

It is not clear from the text of the draft law on the taxation of cryptocurrency transactions what tax will be imposed on digital assets, and the amount of fines being imposed is unreasonable. This is stated in the conclusion of the legal department of the State Duma of the Russian Federation.

The experts pointed out that in the document digital currency was taken Immediate Bitcoin out of the value added tax and income tax. In this regard, they recommended to further justify the recognition of cryptocurrency as an object of taxation.

The bill introduces penalties for individuals and organisations that fail to report the right to dispose of cryptocurrency, turnover and balance in a timely manner if the amount of receipts or debits for the year exceeded the equivalent of RUB600,000.

If the taxpayer failed to include cryptocurrency receipts in the tax base, the penalty will be 40% of the unpaid tax. Failure to report digital currency receipts or debits would incur a charge of 10% of the higher of the debit or account balance. If the information is not submitted on time, the fine would be 50,000 roubles.

„The explanatory note does not contain arguments for the amount of fines envisaged. Arbitrary regulation of such relationships is unacceptable. In addition, the document provides for different penalties for the same offence – failure to submit a report on digital currency transactions and balances to the tax authority,“ the opinion reads.

The document gives taxpayers the right to report the ability to dispose of digital currency (including through third parties), to submit reports on transactions with it and account balances.

„However, based on the essence of the draft law, the above is not a right but an obligation of the taxpayer,“ the experts pointed out.

The Tax Service is given the authority to request from banks statements of accounts of individuals used to conduct transactions with digital currency in case of suspicion of violation of the law. However, the draft does not provide clarification on the procedure under which the supervisory authority can establish indications of such a violation.

Also, the document does not address the taxation of digital financial assets.

Opinion of the Legal Department by ForkLog on Scribd

Comments have been sent to the RF State Duma Committee on Budget and Taxes.

Recall that the government-approved bill on the taxation of cryptocurrencies was submitted to the State Duma in early December 2020.

Specially for ForkLog, experts carried out a breakdown of the bill.