- Under the new guidelines, failing to declare crypto taxes will attract a three-year jail term.
- Per the ministry, these changes aim to align with FATF’s crypto regulation recommendations.
- The ministry claims there will be judicial protection for citizens that report crypto transactions.
The Russian Ministry of Finance intends to make amendments to its tax law in a bid to clarify regulations surrounding crypto taxation. The ministry unveiled this news on November 11 through an article, noting that the proposed changes are necessary for the implementation of the rules embedded in the law on digital financial assets and digital currencies, which the country adopted in the summer of 2020. On top of this, the amendments seek to align the regulation of digital assets with FATF recommendations. The finance ministry went on to note that complying with FATF’s recommendations would help mitigate money-laundering operations in Russia.
In the publication, the Ministry of Finance asserted that these amendments mandate all organizations and individuals that deal with cryptocurrencies to send their transaction data to Rosfinmonitoring.
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The ministry went on to note,
“In addition, judicial protection of holders of digital currency is provided if the owner informs both about the fact of possession of the currency and about transactions with it. The corresponding protection procedure is provided for in the Tax Code. At the same time, in the case of transactions with digital currency in excess of a certain amount, the declaration becomes mandatory.”
Russia is gradually warming up to crypto
Per the proposed changes, Russians can face sentences of up to three years in prison should they fail report crypto transactions amounting to 45 million rubles (£442,581) or more at least twice in three years. Additionally, the citizens must report transactions and wallet balances that surpass 600,000 rubles (£5,945) in a calendar year. Failure to do so on time might attract a fine of up to 50,000 rubles (£485).
Before publishing the new crypto taxation guidelines, the ministry had previously proposed harsh punishment for individuals that fail to declare crypto taxes accordingly. A September 24 report, unveiled that the ministry had recommended a three-year prison sentence for anyone that fails to report crypto transactions totalling 1 million rubles (£9,862) or more.
While the recently-published guidelines are not as strict as the previous ones, they are deeply flawed. This is because they only mention penalties for failing to declare taxes accordingly. They, however, fail to mention the penalties for criminals that use crypto to complete illicit transactions.
Commenting on this blind spot, Maria Stankevich, the head of business development at EXMO Exchange said,
“We don’t see any criminal liabilities for the dark crypto market or the cash exchangers in Moscow that are still processing large amounts of dirty crypto. Basically, what the government is trying to do is to prosecute the citizens instead of creating solid regulations of bad market players (as for example the UK does).”