More Russians Disclose Cryptocurrency Income: Report

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The number of disclosures of cryptocurrency holdings in Russia has increased in recent months, according to a new report.

Russian news agency Izvestia reported on Thursday that Russians are increasingly disclosing their crypto trading income for tax purposes. The report cites data from consulting and law firms such as KPMG, PwC, FTL Advisers, as well as a Moscow-based public policy think tank, the Center for Strategic Research.

“We have observed that Russian residents have started to voluntarily disclose income from transactions with digital assets, mainly with cryptocurrency, in tax returns,” said Maria Kukla, partner of FTL Advisers.

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She noted that it is still too early to determine whether the trend will generalize. The currency tax reporting period ends on May 1 and, according to Kukla, a lot could change before then.

Evgeny Sivoushkov, director of PwC Russia’s Individual Taxation Division, said interest in disclosing crypto holdings has increased during the current tax reporting period. According to Sivushkov, the new trend was fueled by the adoption of the Russian law on cryptography “on digital financial assets”, as well as by the increased focus of tax authorities and compliance services on the origin of income and foreign assets of the Russians.

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PwC Russia and FTL Advisers did not immediately respond to TBEN’s requests for comment.

The reported increase in the number of cryptocurrency declarations comes despite Russia not officially implementing dedicated cryptocurrency taxation legislation. However, according to Izvestia sources, the Federal Tax Service of Russia indicates that the procedure for taxing crypto income by individuals is formally described in a letter from the Ministry of Finance published in May 2018.

According to the letter, the tax base for crypto trading is defined in Russian rubles as “the excess of the total amount of income received by taxpayers from the sale of cryptocurrency over the total amount of documented expenses for its acquisition.”

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Russia is moving forward with proposed new legislation that would require Russian residents to pay tax on income from cryptocurrency trading. The bill, which was approved by the State Duma on first reading in February, required residents to report crypto transactions if their total amount exceeded 600,000 rubles ($ 7,800) on an annual basis.