Russia Plans to Tax Crypto Miners on Unrealized Gains

Russia Plans to Tax Crypto Miners on Unrealized Gains

The Federal Tax Service of Russia has announced plans to implement a tax system for cryptocurrency miners based on unrealized gains which would require them to pay taxes on mined coins even if they have not yet been sold. According to a report by the Russian newspaper Vedomosti the FNS intends to establish a "two-stage" tax framework specifically for crypto miners.

Alexey Katyayev the head of the Interregional Inspectorate for the FNS’s "Largest Taxpayers" group discussed these plans at a recent meeting of the newly formed Industrial Mining Association. Katyayev noted that while there is an interest in applying a "classical system" of taxation to miners no final decision has been made regarding the implementation of these measures.

Under the proposed plan miners would be required to make advance payments on their mined cryptocurrency. Katyayev explained that this would represent the "first stage" of the tax process and would become due as soon as miners receive the coins in their crypto wallets. In the eyes of the FNS this would constitute a taxable event even if the cryptocurrency remains in a mining pool and has not been transferred to a personal wallet.

Katyayev elaborated on a "second stage" of taxation which would occur when miners either withdraw coins from corporate wallets or sell their cryptocurrency. His comments highlight the complexities of taxation for an increasing number of Russian companies that are integrating crypto mining into their existing business operations.

As the regulatory landscape for cryptocurrencies continues to evolve in Russia the FNS’s proposed approach may set a precedent for how miners are taxed on their digital assets particularly as the country seeks to regulate its growing crypto industry.