Russian Tax Authority Permits Citizens to Report Cryptocurrency Income for Tax Purposes

In an unexpected development, the Russian Federal Tax Service (FTS) has announced that citizens are permitted to report taxes on their cryptocurrency profits, even though tokens lack legal recognition in the nation. This declaration emerges amid a divided governmental perspective on cryptocurrencies, with the Central Bank advocating for a prohibition akin to China’s stance, while other governmental departments show interest in legalizing and regulating digital assets.

The FTS outlined two approaches for declaring crypto earnings. Individuals may either report their profits on their personal income tax filings or take advantage of the simplified taxation system (STS). It is crucial to highlight that cryptocurrencies do not currently possess legal status in Russia, resulting in a persistent stalemate among various governmental entities.

The scenario is further complicated by the sanctions placed on Russia by the United States and its allies. Consequently, some Russian enterprises are resorting to cryptocurrencies to reduce reliance on the dollar and facilitate trade. In light of this intricate situation, the finance ministry has suggested a compromise that would effectively limit cryptocurrency transactions to miners only, thereby excluding most of the population.

Nonetheless, the FTS has offered an alternative viewpoint. It recognizes that while cryptocurrencies lack a clearly defined legal status, they can be acknowledged as a type of property and should be reported as such on tax returns. Russian courts have previously determined that cryptocurrencies can be safeguarded as intangible property, falling under existing property rights. The FTS recommended that taxes be calculated in fiat rubles and advised traders to submit a declaration using current documents by April 30, 2024. Furthermore, those choosing the STS can compute their earnings by assessing the difference between their sales revenue and the acquisition cost of the cryptocurrency.

Despite the ambiguity regarding the legal status of cryptocurrencies in Russia, the FTS’s stance is consistent with earlier court decisions and offers individuals a method to declare their crypto earnings for tax obligations. As discussions progress, it remains uncertain how the Russian government will eventually regulate and incorporate cryptocurrencies into its legal framework.

The post Russian Tax Body Allows Citizens to Declare Crypto Earnings for Taxes appeared first on BitcoinWorld.