Russian digital currency owners will be required to disclose their digital currency holdings if their annual transactions exceed 600,000 rubles. The new threshold is part of the amendments the Russian Ministry of Finance has proposed. Those who fail to disclose their digital currency transactions will face penalties and jail terms of up to three years.
Russia has taken a keen interest in the digital currency industry in recent years. From requiring its public officials to declare their digital currency holdings to banning and blacklisting digital currency-related platforms, the country has been monitoring the industry keenly.
The latest move by the Finance Ministry is a follow-up on a bill it proposed in September relating to digital currency taxation. As it was reported, the Ministry proposed a bill that made it mandatory for digital currency whose stash was worth $1,300 and above to report it in their taxes. Violators of this law would have to pay a fee equal to 30% of the amount they received, no less than 50,000 rubles ($650).
In its latest amendment, the Ministry has raised this threshold six-fold to 600,000 rubles ($7,800). As Russian media outlet RBC reports, the new bill will likely become law by January 2021. As such, the government wants digital currency owners in Russia to disclose their holdings for 2021 no later than April 30, 2022.
Just as with the previous bill, the Finance Ministry has proposed monetary penalties and jail terms for those who violate the bill. Those that fail to report their digital currency holdings and pay the due taxes for three years in a row will serve six months in prison for digital currency worth $195,000 and above, and three years if it’s worth $586,000 and above.
The Federal Financial Monitoring Service of the Russian Federation will be in charge of the digital currency taxes, the bill states. Known popularly as Rosfinmonitoring, the agency aims to combat money laundering, terrorist financing and similar financial crimes.
The Russian digital currency community has welcomed the regulations, pointing out that the legal recognition will go a long way in setting up the industry to go mainstream. However, most believe that the criminal punishment for failure to report one’s digital currency holdings is excessive.
Speaking to RBC, Pen & Paper LLP’s Alexey Dobrynin pointed out that tax withholding for other assets is not subject to criminal charges. He believes that such a law could deter investors from getting into digital currencies.
Mikhail Uspenskiy, a partner at Taxology LLP concurs, noting that no Western country has such a stipulation. He believes that this could deny Russia the chance to keep up with Europe and the U.S. in the digital currency space.