Russia came close to introducing cryptocurrency tax legislation after the Russian parliament initially approved the proposal.
The Russian state news agency “RIA Novosti” reported that the State Duma and the House of Representatives of the government have approved a bill on digital currency taxes on Wednesday.
The bill has been in preparation for several years and is making amendments to the existing federal tax law.
The proposed law defines cryptocurrencies such as Bitcoin as proprietary while making it a crime not to declare profits from cryptocurrency trading.
This includes residents of the country and foreign citizens, as well as domestic and international organizations based in Russia.
The new legislation introduces a requirement to report cryptocurrency transactions if their total value, for both incoming and outgoing transactions, exceeds 600,000 rubles (about $ 8,130) per year.
It is assumed that this value is calculated based on the price of the cryptocurrency market, however the exact mechanism for this has not been detailed.
Late reporting or misinformation is subject to a fine of up to 10% of the largest total amount for one set of transactions, both incoming and outgoing.
The proposal also includes penalty fees of up to 40% of unpaid tax in the event of non-payment or underpayment of the tax.
On a more positive note for long-term bitcoin owners, owning cryptocurrencies is a non-tax event provided it does not contain any transactions.
However, the exact mechanism for monitoring transactions is not entirely clear.
According to the paper accompanying the bill, the new legislation aims to address tax evasion, money laundering, and other illegal activities.
The bill is currently in the hands of the Parliament’s Budget and Taxes Committee before the second reading, which must submit amendments to the documents before March 18.
Despite separate legislation on digital finance that came into effect in January prohibiting locals from making payments in cryptocurrencies, Russia’s legal framework still suffers from a lack of clear definition of terms such as “cryptocurrencies” or “digital currencies.”
This further complicates the regulation of cryptocurrencies in Russia.