Russia has passed a bill that exempts cryptocurrency issuers from Value Added Tax (VAT). This move is to further strengthen his pro-crypto stance through his legislation. The lower house of the Russian legislature, the State Duma, has approved this bill.
Reportedly, some other services related to crypto exchanges will also be exempt. The current tax rate for cryptocurrency companies that participate in these deals related to digital assets is 20%. The continued sanctioning of the West has wreaked havoc in Russia after the invasion of Ukraine.
Russia has been witnessing a financial crisis and that, in turn, has made it difficult for Russia to conduct international transactions. To boost its economy, Russia has taken a positive stance on cryptocurrencies to facilitate the growth of the industry.
Crypto VAT exemption details
Aside from the VAT exemption, this bill that has been passed states that the income tax rate will be 13% for cryptocurrency exchanges on the first 5 million rubles, which is currently worth $93,000. of annual tax base, 15% in amounts that cross the aforementioned level and 15% in general for currency operators.
However, the Central Bank of Russia has been on the opposite side of cryptocurrencies just like other central banks around the world. Despite being opposed to cryptocurrencies, the state licensed the first local digital assets platform, Atomyze Russia. After the licensing of Atomyze Russia, the main lender Sberbank received a license.
Members of the State Duma has approved to draft the tax law. The bill aims to reduce taxes for cryptocurrency issuers and also helps define the tax rates on the income received from the sale of the assets. Now, for this bill to become law, the signature of President Vladimir Putin is required.
Once the bill has passed, the details of how digital assets will be managed will be laid out. The taxation of digital assets under the bill is analogous to securities taxes at the current time, once the bill is passed some light will be shed on such a position.
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Russian banks blocked from the SWIFT system
Russia’s banks have been blocked from the SWIFT system and the Group of Seven G7 countries recently stopped buying freshly mined and refined Russian gold. This has added more pressure on Russia’s financial situation.
Not only this, there are other sanctions that have caused Russia to default on foreign debt service. Anti-crypto leaders in the US have the idea that Russia can turn to crypto to avoid sanctions, so they insist on a crackdown.
Russia for the first time since 1917 has defaulted on foreign debt. The year 1917 is historic since that year the Bolshevik Revolution had taken place. Russia received a 30-day grace period, but failed to pay interest on two different bonds.
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