Russian State Duma is planning on changing the taxation threshold for cryptocurrency transactions to cover more taxpayers dealing with digital assets. As the interest in the assets from investors grows, the government wants to make sure the crypto holders will not avoid taxation.
According to the Russian Tax Code that came into force in January 2021, cryptocurrency holders are subject to taxation if they make transactions with the total volume exceeding 600,000 roubles per year ($8,000).
Anton Gorelkin, the member of the Information Policy Committee, believes that the growth in cryptocurrency prices created favourable conditions for attracting people to the industry. In his Telegram channel, he wrote that the growth in Bitcoin price will bring in many new investors, including those from Russia.
Indeed, during 2020, the number of cryptocurrency users increased by 45%, according to the data by Paxful. And this number continues to grow. During the first week of February 2021, the total volume of transactions exceeded 16 million roubles ($217,000), which is more than during any similar previous period.
According to Gorelkin, such growth in interest might trigger the growth of shadow economy and tax evasion. For this reason, the State Duma is considering lowering the limit to cover more taxpayers that hold cryptocurrency.
Generally, the Russian government still remains cautious about cryptocurrency, arguing that digital assets are a tool for illegal operations. Currently, a person might even end up in prison for tax evasion amounting to 40 million Roubles ($54,000), as per the report by CoinIdol, a world blockchain news outlet.
This, along with a complicated business reporting, makes Russia one of the countries with nut favourable conditions for building and developing cryptocurrency business. However, this does not seem to scare off users.
According to a report by Chainalysis, Russia is leading the globe by the index of cryptocurrency adoption. Besides, the country can also boast of the biggest amount of digital asset transactions made by the citizens within the country. So even if the government decides to change the taxation limit, it will hardly stop the growth of the industry in the state. Its flourishing seems to be imminent.