Russia has long been citing financial stability as the main reason for its distrust of cryptocurrencies and other digital assets. Following its invasion of Ukraine, the Russian government’s views on digital assets have begun to shift. The Bank of Russia has accelerated the creation of the Digital Rubles as a result of the numerous economic and international sanctions the West has put on Russia.
On June 27, the State Duma, the lower house of the Russian Parliament, passed the bill in its second and third readings on the specifics of imposing value added tax (VAT), income tax, and personal income tax (PIT) on transactions for the sale of digital financial assets (DFA). The passed bill calls for value-added tax exemptions for those who issue digital assets and operate information systems for their issuance in the Russian Federation. According to the Russian state-run news station, RIA Novosti, a few additional services provided by digital asset exchanges will also be excluded.
The government explained that one of the essential requirements for the effective operation of the digital economy is the full implementation of digital projects and the development of a competitive digital rights market. The bill is approved, envisioning the need to establish a distinct process for taxing activities involving such digital assets.
The law exempts from VAT all transactions for the sale of digital financial assets in Russia, as well as operators of the information systems in which they are issued and operators of DFA exchanges for the admission of digital rights to circulation in such systems. With the exception of consultancy and software rights services, this incentive will also be applicable to certain of these operators’ other services.
As with normal assets, the current transaction rate is 20%. The tax would be 15% for foreign corporations and 13% for Russian companies under the new law. However, the bill still needs to be approved by the upper house and signed by Vladimir Putin, the President of Russia, in order to become law.
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