A new draft law in Russia aims to clarify the taxation of personal income derived from cryptocurrency transactions. As stated in the official source, this legislation is set to provide a structured approach for crypto traders, allowing them to navigate their tax obligations more effectively.
Introduction of Taxation Procedure for Cryptocurrency Transactions
The proposed law introduces a specific article that outlines the procedure for taxing personal income generated from the sale or exchange of cryptocurrencies for fiat currency. Notably, Russian crypto traders will have the opportunity to reduce their taxable income by accounting for acquisition costs and fees paid to various intermediaries, including:
- exchanges
- depositories
- brokers
- banks
First-In-First-Out (FIFO) Method for Expense Recognition
Additionally, the draft law stipulates that expenses related to the acquisition of digital currencies will be recognized using a first-in-first-out (FIFO) method when calculating income from transactions. This means that the costs associated with the earliest purchased cryptocurrencies will be deducted first, potentially lowering the overall tax burden.
Offsetting Profits and Losses
Moreover, the bill allows for the offsetting of profits and losses within the same tax period, providing some flexibility for traders. However, it is important to note that the carryover of losses to subsequent periods will not be permitted, which could impact long-term trading strategies.
Responsibility of Intermediaries in Tax Withholding
Finally, the legislation places the responsibility of tax withholding and transfer onto intermediaries such as brokers and trustees, particularly when income is deposited into accounts managed by these entities. This move aims to streamline the tax collection process and ensure compliance with the new regulations.
The recent draft law in Russia regarding cryptocurrency taxation contrasts sharply with the UK government's recent decision to ban cryptocurrency donations to political parties, following the Rycroft Review. For more details, see read more.
