Russians Declared Crypto Incomes on Tax Returns
A sizeable majority of residents of Russia wish to use Bitcoins and use crypto for payments. Russians are ready to use cryptocurrency for making payments and as an investment instrument. The Federal Tax Service of Russia reported on its website that a resident of the Altai Republic has for the first time declared income obtained through sales and purchases of cryptocurrency on the tax return filed by the respective person.
The taxpayers in Russia have been dealing in crypto and have started to declare the profits and incomes from crypto related transactions through tax returns even though cryptocurrency is not yet legalized in Russia. The announcement made by the Federal Tax Service of Russia was based on the results from tax collecting campaign this year.
The tax base for all the crypto related transactions is calculated in rubles in Russia. The tax is calculated on the excess amount of the total money received from the sale of the cryptocurrency over and above the total expenditure incurred in order to acquire the said cryptocurrency. The residents of Russia are expected to follow the mentioned guidelines, in absence of any specified rules.
Since no dedicated provisions are set for tax aspect of cryptocurrency related transactions, The Finance Ministry of Russia declared that the taxpayers in Russia can reduce their taxable income, i.e. income earned through the sale of cryptocurrency, by deducting the incurred and documented expenses for the purchase of cryptocurrency assets. If any kind of confusion persists, the tax legislation is expected to favor the taxpayer.
People in Russia are still not clear about the special crypto tax rules and demand justification. As requested by President Putin, the Council of Ministers and the Central Bank of Russia (CBR) shall decide the special crypto tax rules before the July of 2018. The ultimate decision depends on the legality of cryptocurrencies which is still pending. A survey also pointed out that for 12 percent of the Russians, Cryptocurrency is becoming the main source of income.
Income tax in Russia is about 13% and Russia is set to become a crypto-friendly jurisdiction. It is expected that Russians will pay the same flat rate on crypto income too.
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