The State Duma passed in the first reading a bill that introduces in the Tax Code (TC) of the Russian Federation a provision on the mandatory declaration of digital currency and fines for taxpayers who have not included in the tax base profit or income from transactions, settlements on which were carried out using digital currencies.
The bill (N1065710-7) was submitted to Parliament by the government in December 2020. It proposes to recognize digital currency as property for the purposes of application of the TC.
According to the amendments, the mandatory tax declaration will be subject to transactions with digital currency in excess of 600 thousand rubles (~$8466) per year, and the Federal Tax Service will have the right to demand from banks statements of accounts of individuals, if the operations on the accounts are associated with the transfer of digital currency and there are signs of a possible violation of tax law.
Failure to submit a report on digital currency transactions and balances or submission of inaccurate information will incur a fine of 10% of the higher of the two amounts in rouble equivalent of receipt or write-off of currency, information on which was not submitted, and a fine of RUB 50,000 (~ $705,50) for failure to submit the information by the deadline. If the taxpayer did not include the profits or revenues from transactions, payments on which were carried out by using digital currency in the tax base, he will face a fine of 40% of the amount of unpaid tax in terms of such transactions.
Earlier the bill received a negative opinion of the Presidential Council for Codification, as well as a number of comments from the legal department of the State Duma, the Committee on the Budget and the Committee on Legislation. The main comment is that the bill recognizes digital currency as property, but only for the application of the Tax Code, while the Civil Code does not contain such a concept as digital currency.
The definition of digital currency is contained in the law on digital financial assets (DFA), which came into force on January 1, 2021, but the same law prohibits in the Russian Federation advertising ways to pay with digital currencies and the use of cryptocurrency to pay for goods and services. The situation is also complicated by the fact that the law on bankruptcy and enforcement proceedings recognizes digital currency as property.