![Bitcoin [News Pool]](https://dohodvseti24.ru/wp-content/uploads/2021/03/onlajn-novosti-o-bitkoine-logotip.png)
The Ministry of Finance and the Federal Tax Service of Russia plan to amend the Tax Code, oblige Russians to report on their possession of crypto assets, as well as tighten tax control over income from cryptocurrency transactions.
Cryptocurrency was created for this purpose, so that everyone can free and, The main thing, anonymously, manage your money. However, the state has a different opinion. He doesn't like the idea of new money, therefore it will try to prohibit or control them, at least in terms of mandatory reporting and payment of taxes. The regulator wants to know, who earns how much and for what purposes they spend it. To paraphrase the words of the Roman Emperor Tiberius: “The job of a good shepherd is to shear his sheep...”.
Legal framework and basis for taxation of cryptocurrencies
In the USA with 2021 year, a section for transactions with cryptocurrencies was added to the tax return, a US Internal Revenue Service (IRS) asks Congress to expand powers
to control cryptocurrency transactions. The Russian Ministry of Finance and the Federal Tax Service have not remained aloof from global regulatory practice and are making efforts to prepare regulations, controlling the circulation and taxation of digital assets.
In February 2021 The State Duma of Russia adopted in the first reading
bill No. 1065710-7 “On amendments to parts one and two of the Tax Code of the Russian Federation”. The bill defines the mechanism for taxation and declaration of digital currencies.
It provides:
recognition of digital currencies for property tax purposes;
mandatory declaration of information on transactions with digital currencies, if the annual turnover exceeds ₽600 thousand;
procedure for determining the market price of digital currencies;
the procedure for tax authorities to request from banks certificates of accounts of individuals for transactions with digital currencies;
provision by payers in electronic form of information on obtaining the right to dispose of digital currencies;
procedure for submitting reports on transactions and balances of digital currencies;
liability for failure to provide relevant information to the tax authorities and non-payment of taxes on transactions with digital currencies.
From a control point of view, it is worth noting, that previously the concept of digital currency had no definition in the Tax Code. Therefore, the adoption of the amendments will lead to taxpayers having obligations to inform the Federal Tax Service and pay taxes. Tax authorities will have the opportunity to control the movement of money in taxpayer accounts in terms of transactions with digital currencies. Moreover, control operations will not be carried out as part of tax audits, and based on regular requests from banks.
A similar approach has already been tested in international practice: eg, The IRS sent out
letters to cryptocurrency owners, which, according to the agency, filed an incorrect tax return and demanded to pay taxes on cryptocurrency income. The regulator received the basis for filing a tax claim after comparing the provided income statement and information received during requests from several cryptocurrency exchanges.
At the suggestion of the Ministry of Finance of the Russian Federation, all Russian citizens will be required to declare their transactions in digital currencies, with the exception of citizens, located in the country for less than 183 days. Transactions with digital currencies will be subject to taxation, passing through Russian bank accounts. Based on them, the tax base and tax obligations will be determined..
Taxation of cryptocurrencies in the first edition of bill No. 1065710-7
Taxes and rates:
Individuals are required to pay personal income tax, and legal income tax.
For individuals the tax rate will be 13% from profit and 15% of income, exceeding 5 million rubles per year. Legal entities pay tax at the rate 20%, however, a reduction in the tax base by the amount of depreciation deductions is not provided;
If during the calendar year the turnover on transactions with digital currencies does not exceed ₽600 thousand, no need to report or pay taxes.
Penalties:
Failure to provide information about ownership of digital currency to the tax authority, reports on transactions or provision of distorted data - a fine of 10% from the greater of two amounts - or from the purchase amount, or from the sale amount.
Failure to submit information on ownership of digital currency to the tax authority within the prescribed period, reports on transactions and balances – ₽50,000.
Non-payment or incomplete payment of tax - in the amount 40% from the amount of unpaid tax.
Since digital currencies are recognized as property, then the regulator proposes to establish tax consequences in the bill, similar to property purchase and sale transactions: or personal income tax, or income tax.
Transactions with digital currencies have been subject to taxation since January 2021 of the year. Despite, that tax authorities have yet to develop a methodology for determining the market price of digital currency, amnesty on assets, available to cryptocurrency market participants before 2021 of the year, not provided.
Need to pay attention, that the bill approved in the first reading provides for the occurrence of notification and tax obligations of the parties when receiving and/or writing off digital currency, exceeding the amount, equivalent in monetary terms to ₽600 thousand per year. This is not a one-time operation., as defined in the provisions of Article 6 of Law 115-FZ, and about the annual limit, and in both directions: how are the receipts, and write-offs.
As of early November 2021 year, the bill is being finalized for the second reading.
Contradictions of legislative norms and law enforcement practice
The concept of digital currency and its status as property introduced into the Tax Code contradicts the approach, implemented in the Law “On Digital Financial Assets” (31.07.2020 N 259-FZ), where the concept of “digital currencies” is considered as a type of payment instrument, and therefore their use as a calculation tool is limited. Not only the fact of the existence of digital currencies as special objects is recognized, but their ability to be used specifically as a means of payment is also indirectly confirmed.
The term “digital currency” is absent in the Civil Code, and taking into account the provisions of the Law “On Digital Financial Assets” and Article 128 of the Civil Code of the Russian Federation, can already be interpreted as a property right, not property. Therefore it is not clear, what tax regime to apply?. The current version of the bill does not establish a procedure for documenting expenses for the purchase of digital currency, determining its market price on a specific date and other expenses, which could reduce the tax base.
Traditionally, the Federal Tax Service will try to interpret the identified violations in its favor. To argue against such actions, It is recommended to collect statistics on transactions with digital currencies. We must remember, that the tax authority can attach documents to the case, compiled in Russian. therefore, if you plan to provide statements from accounts of foreign sites, then these extracts, like any other document in a foreign language, must be translated into Russian.
The Central Bank of Russia is exerting additional pressure on the cryptocurrency market, which takes a strong position regarding the regulation of transactions in digital currencies. Banks are given the right to work with digital currency, since it is “legalized” property, but subject to proper identification of all participants in the transactions. In September 2021 year, the Central Bank of the Russian Federation informally recommended
commercial banks to suspend or slow down customer transactions in the direction of crypto-exchange services and cryptocurrency exchanges, and also contributed
transactions with cryptocurrency exchangers in recommendations for blocking cards and accounts.
Legislative transactions of digital currency exchange, entering Russian currency on cryptocurrency exchanges and withdrawing rubles from an exchange account to a bank card are not prohibited. To avoid account blocking, when performing transactions in excess of legally established limits, It is advisable to discuss such transactions with the settlement bank in advance. As a result, you can forget about anonymity, because. the bank has the right to block accounts and refuse to carry out transactions. You also need to evaluate possible tax consequences., since the fact of the operation, most likely, will be brought to the attention of the tax authorities.
About tax reporting preparation
The main and so far only law, which defines the concept of DFA and digital currency in the Russian Federation - 259-FZ “On DFA” dated 31 july 2020 of the year. The law defines, regulates the issuance of DFA, DFA exchange and digital currency turnover in Russia. The circulation of digital currency in the Russian Federation is limited - you cannot sell a product or service in exchange for digital currency. However, it can be purchased, exchange, store and sell, without forgetting to pay tax on the income received.
About that, that this tax must be paid, You can find out from the letter of the Ministry of Finance of the Russian Federation No. 03-03-06/1/73953 from 24.08.2020 of the year. The Ministry of Finance explains, what's in the chapters 23 and 25 The Tax Code of the Russian Federation does not define a special procedure for taxation of income, received when performing transactions with digital currency, therefore, before the adoption of amendments to the Tax Code of the Russian Federation, when determining the taxable base, income tax income is taken into account in the general manner. In accordance with p. 1 Art. 41 and Article 271 of the Tax Code of the Russian Federation, income is recognized as economic benefit in cash or in kind.
Important, that according to current legislation, income or expenses are recognized in that tax period, in which they took place, regardless of the actual receipt of funds, ie. the actual receipt of funds and other payment methods are not important when calculating the tax base for income tax. In this way, if owners of crypto assets plan to avoid fines for late payment of taxes, and also use the opportunity to include expenses to reduce the tax base, they need to confirm changes in the value of assets on each calendar date.
Good citizens must have a mechanism to prove the value of owning digital assets, be able to calculate and pay taxes, and also, at the request of regulators, confirm the economic meaning of the operations being carried out.
To provide owners of crypto assets with a proof mechanism, a team of Russian lawyers created the Bitnalog service. With its help, it became possible to generate the required tax returns, correctly calculate and pay taxes, as well as fulfill other obligations.
Technically, the service is fully adapted to working with form 3-NDFL and automatically filling in the required fields. Based on the results of work in the service’s personal account, the user receives a declaration in 2 formats for personal submission to the Federal Tax Service (pdf) and for electronic (xml). Soon, the generated 3-NDFL declaration will be accompanied by the ability to download a file with a list of recorded transactions with crypto assets. This file can be attached to the declaration on the website nalog.ru.
After the approval of amendments to the Tax Code of the Russian Federation, the Bitnalog service will be supplemented with forms of other reports and declarations, including messages about the presence of cryptocurrency wallets, declaration of transactions and balance of crypto assets at the end of the reporting year.
27 july 2021 cryptocurrency exchange Binance announced
service tool, which collects tax information and provides access to it in the form of API keys – Tax Reporting Tool API. When integrated via API with the Bitnalog service, information about the movement of digital assets on the exchange account is automatically updated in the user’s personal account., data on transactions performed and current balances. In the same way, Bitnalog will combine user data received from other cryptocurrency exchanges and wallets into a single database.
The service automatically determines and accounts for expenses according to transactions, which the user deemed necessary to load via the API, further calculates income and expenses in accordance with the tax legislation of the Russian Federation, then the information is transferred to 3-NDFL, other reporting forms are generated simultaneously.
As one of the authorization options in the Bitnalog service and to obtain the necessary data from Form 3-NDFL (so as not to enter personal data manually) it is planned to submit documents through the State Services website.
You can independently calculate your profit and fill out the 3NDFL form on the State Services or Federal Tax Service website.
In conclusion
The bill has not yet passed the third reading and has not been signed by the president., it is not necessary to fulfill his requirements. Therefore, until amendments to the Tax Code are adopted, the general provisions of tax legislation apply to taxpayers. In most cases, the tax base and tax liability arise from the sale of digital currencies. The amount of taxes is calculated based on the market price of the cryptocurrency on the date of actual completion of each transaction. Let's repeat, that any withdrawal of digital assets into fiat is clearly subject to taxation without the deduction of unsupported expenses.
maybe, Cryptocurrency market participants will be able to avoid close attention from tax authorities, possessing low-liquid digital assets, Permanently carrying out transactions for small amounts, those that do not carry out transactions through Russian bank accounts or that have gone into the gray zone. Therefore, the bill will hit more law-abiding participants in the cryptocurrency market.
Tax authorities have no actual ability to control the movement of digital assets, eg, on cryptocurrency wallets, or request information about transactions of individuals from cryptocurrency companies unregistered in Russia. Legislative uncertainty and the lack of unambiguously interpreted wording give rise to ferment and speculation among participants in the cryptocurrency community.
After two years of discussions, the only law passed, dedicated to digital assets – “About digital financial assets, digital currency and amendments to certain legislative acts of the Russian Federation” from 31.07.2020 N 259-FZ, never brought final clarity to the procedures for regulating the cryptocurrency industry
From the point of view of Russian legislation, different tools and terms are used, that do not coincide with those accepted in world practice. And bill No. 1065710-7 “On amendments to parts one and two of the Tax Code of the Russian Federation”, in its first edition, introduces even more misunderstandings on the part of all participants.
Let's hope, that the legislation of the Ministry of Finance and the Federal Tax Service will ultimately serve good purposes - to make the taxation of transactions with digital currencies a transparent and understandable procedure and will not become another restrictive measure of the state, destroying the country's cryptocurrency industry. For, returning to the words of the Roman Emperor Tiberius - “The task of a good shepherd is to shear his sheep, and not skin them.".