The law introduces a personal income tax of 13% to 15% on the sale of cryptocurrencies, while exempting mining operations from VAT and imposing a higher corporate tax rate of 25% on mining profits.
Russian President Vladimir Putin has signed a new federal law regulating cryptocurrency mining and legally recognizing digital currencies as property. The law will come into effect on January 1, 2025 and introduces a personal income tax of 13% to 15% on the sale of virtual currencies, and exempts mining operations from value added tax (VAT). It also requires mining infrastructure operators to report their services to local governments on a quarterly basis, with penalties for late submissions.
The law also recognizes digital currencies as property, gives them legal status and allows their use in cross-border transactions under Russia's experimental legal system. Cryptocurrency miners will be taxed in stages according to their income, with a 13% tax rate on income up to 2.4 million rubles and a 15% tax on income above that level. However, corporate profits from mining activities will face a higher tax rate of 25% from 2025 onwards.
In addition to tax changes, Russia's ongoing energy crisis is restricting mining activities in energy-starved regions. Certain regions, such as Irkutsk and Donetsk, could face mining restrictions until 2031, which could have a significant impact on mining companies that rely on cheap energy sources.
This regulatory clarity is contributing to increased demand for cryptocurrencies, as reflected in an 8% increase in traffic to major exchanges in November. However, the energy-intensive nature of mining and regional constraints remain key challenges for the industry.
