The Russian Duma has approved a bill to stop charging VAT on cryptocurrency. Lower income tax rates will also be applied.
This is not charity for Russian citizens, but part of a larger plan. Russia sees blockchain technology as a way to fight the economic isolation they find themselves in. Just about the entire world has imposed economic sanctions on Russia because of its special operation in Ukraine.
Less tax on crypto
The State Duma, the lower house of the Russian legislature, has therefore passed a bill on how to tax cryptocurrency. A sale (with profit or loss) will be exempt from value added tax (VAT). Some other digital asset exchange services will also be exempt, according to Russian news service RIA Novosti.
In addition, the bill states that income tax rates are set at:
- 13% for Russian exchanges on the first 5 million rubles (88,400 euros) of taxable base per year,
- 15% on amounts above that limit
- 15% across the board for currency traders
The current tax rate is 20%.
Building a digital economy
The government notes in the bill that a separate tax procedure for digital assets is essential to creating an effective and competitive digital economy.
Russia has turned 180 degrees in its skeptical attitude toward cryptocurrency. Before the special operation in Ukraine, the Russian central bank was especially critical of crypto and threatened to take steps.
But President Putin whistled the central bank back, and that was even before all the economic sanctions. As if Putin knew what was going to happen.
No more SWIFT and gold
Currently, major Russian banks are blocked from the SWIFT system which in practice means that international transactions are incredibly difficult for businesses and normal individuals.
In addition, this week the G7 countries have stopped the purchase of newly mined or refined Russian gold.
Time for bitcoin?
No more gold and no more international transactions? One would almost think that Russia is being deliberately pushed into the corner of bitcoin by the rest of the world.
Meanwhile, Russia’s foreign reserves are also drying up, leaving the country could not meet to pay off their foreign debts.
The amount in question was about $100 million in interest payments that the country should have made to foreign investors on May 27. Even after an extension of the usual 30 days, Russia was unable to meet this.
A bitcoiner would recommend switching completely to bitcoin, and with all the energy Russia has, mining itself, but it’s never that simple.
Central bank wants its own digital currency
The Russian central bank is in fact preparing to launch their own stablecoin.
Olga Skorobogatova, the vice president of the Russian Central Bank said just last Thursday that the trials of a digital ruble are being brought forward. These were initially to take place in 2024, but are now scheduled for April 2023 .
“I think all self-respecting states will have a national digital currency within three years. We should be ready as soon as possible. Moreover, this solves the problem of blocking SWIFT, because this integration will make SWIFT obsolete”.