Russian Finance Ministry Makes Fresh Bid to Tax Crypto Miners

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Tim Alper

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Tim Alper

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Tim Alper is a British journalist and features writer who has worked at Cryptonews.com since 2018. He has written for media outlets such as the BBC, the Guardian, and Chosun Ilbo. He has also worked...

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June 26, 2023 06:55 EDT

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The Russian finance ministry has launched a fresh attempt to tax crypto miners – in a bid to surmount obstacles thrown up by the nation’s Central Bank and law enforcement agencies.

It has been almost a year since the ministry first attempted to regulate the crypto mining sector – with industrial players urging Moscow to “legalize” their operations. Energy players also want the official green light on projects that could see them mine tokens using surplus energy and associated gas.

But the ministry has been thwarted by the Central Bank and law enforcers. The former wants miners to sell their coins on overseas exchanges to prevent them from “entering” the Russian economy. Law enforcement officials are concerned that this could lead to money laundering.

However, the ministry is now determined not to let the stalemate drag on. It hopes to evade the impasse by using the nation’s tax code regulations, Izvestia reported.

The ministry explains that it “considers it fair to levy a tax on profits received from the mining of cryptoassets.”

While legislative changes to the tax code would require Central Bank and parliamentary approval, the ministry stated that the existing code “contains all the necessary provisions” to allow it to include crypto miners.

The precise “form of taxation” is as-yet undecided, however – and will be contained “within the framework of” a much-delayed draft law on crypto mining.

Will Finance Ministry Finally Succeed in Taxing Crypto Mining?

Mining is neither legal nor illegal in Russia. But as mining is not yet classified as an entrepreneurial activity, it cannot currently be taxed.

The draft law is “still being discussed,” the media outlet quoted Anatoly Aksakov, the Chairman of the State Duma’s financial markets committee, as stating.

Aksakov suggested that the tax could be “an analog of a one-off tax on income.” This would mean profits would be taxed at a sliding rate of between 7.5% and 15%. Alternatively, he suggested, a new fixed-rate mining “profit tax” of 20% could be created.

Oleg Ogienko, the director of government relations at the crypto mining player BitRiver, opined that mining income “should be determined based on the results of” crypto sales.

But, he added, miners should be allowed to deduct their “expenses,” including electricity costs. He warned that prohibitively high taxes would deter crypto mining investors and smaller startups.