Consulting firms such as PwC Russia announced that Russians are increasingly reporting their income from cryptocurrency operations.
The number of cryptocurrencies disclosed in Russia has been increasing over the past few months, according to a new report.
The reason for the explanation
The Russian news agency Izvestia reported on Thursday that it is increasingly disclosing the earnings from the Russian crypto trade for tax purposes. The report includes data from consulting and law firms such as KPMG, PwC, FTL Advisers, as well as the Moscow-based public policy think tank Strategic Research Center.
Maria Kukla, partner of FTL Advisers, said: “We observed that residents in Russia started to voluntarily disclose their income from operations with digital assets, especially cryptocurrency, in their tax returns.”
She stated that it was too early to determine whether this trend would become widespread or not. The currency tax reporting period ends on May 1, and according to Kukla, much could change before then.
Evgeny Sivoushkov, director of PwC Russia’s individual taxation division, said interest in disclosure of crypto assets has grown during the ongoing tax return period. According to Sivoushkov, the new trend was fueled by the adoption of Russia’s “On Digital Financial Assets” crypto law, as well as by tax authorities and compliance services focusing more on the source of income and Russian foreign assets.
The reported increase in the number of crypto tax applications occurred despite Russia’s failure to formally enforce any specific laws on cryptocurrency taxation. However, according to Izvestia sources, the Russian Federal Taxation Service says that the crypto income tax procedure by individuals was formally defined by the Ministry of Finance as part of a letter published in May 2018.
According to the letter, the tax base collected from crypto trade is defined as “the total amount of income generated by taxpayers from the sale of the cryptocurrency more than the total amount of documented expenses for its acquisition”.