Russia's Ministry of Finance announced on Tuesday that the government has approved proposed amendments to the Tax Code aimed at governing domestic circulation of digital currencies and digital rights.
The draft bill lays out multiple tax-related provisions covering retail and corporate activity in digital assets, including exemptions, reporting roles, and how income and expenses should be treated for tax purposes.
Key provisions of the bill
- VAT exemptions: Sales of non-deliverable foreign digital rights that solely certify monetary claims will be exempt from value-added tax. The same VAT exemption is extended to services rendered by digital depositories and by organizations that exchange digital currency.
- Broker and trustee responsibilities: Brokers and trustees who make payments on transactions involving digital currency or foreign digital rights will be required to act as agents for individual income tax purposes.
- Individual taxpayer treatment: Individual taxpayers will be allowed to offset gains and losses from transactions in digital currency and digital rights within the same tax period. The bill explicitly disallows carrying forward losses to subsequent periods.
- Corporate income tax base: Income and expenses arising from digital currency transactions under foreign trade agreements - with the explicit exclusion of mining activities - will be included in the general corporate income tax base.
- Preferential corporate rate for certain digital financial assets: A preferential corporate income tax rate will apply to periodic payments on Russian ruble debt digital financial assets that are issued by domestic entities and traded on organized markets.
The package consolidates treatment across different actors in the digital asset ecosystem - individuals, intermediaries such as brokers and trustees, custodial entities like digital depositories, and corporate issuers - and specifies how various flows are taxed or exempted.
Scope and limitations noted in the bill
The text makes a point of separating mining activities from other digital currency transactions when defining the corporate tax base for foreign trade-related deals. It also confines the individual relief on gains and losses to within the same tax reporting period, removing any entitlement to carry losses forward.
Full procedural details, implementation timelines, and administrative guidance were not included in the announcement, leaving operational questions about reporting and compliance to be addressed as the bill progresses through the legislative process.
Summary
The government-backed bill approved by the Ministry of Finance updates the Tax Code to address VAT treatment, the tax-agent role of brokers and trustees, the intra-period offsetting of individual crypto gains and losses, the inclusion of certain digital asset transactions in the corporate income tax base (excluding mining), and a preferential corporate tax rate for periodic payments on ruble-denominated debt digital financial assets traded on organized markets.