The Russian Ministry of Finance announced that the government has approved proposed amendments to a bill regarding the taxation of income and expenses related to cryptocurrency transactions and mining.

A report by the Russian news agency Interfax states that the new legislation will categorise cryptocurrencies as property for tax purposes.

Under the new regulations, cryptocurrency will be classified as a non-depreciable asset and taxed accordingly.

Corporate income tax will be levied at the standard rate on cryptocurrency mining when it is received in the miner’s wallet, based on its market value.

Furthermore, corporate income tax will apply to the sale of cryptocurrency if there is a profit compared to the original taxed value. In cases of a loss, the difference will be considered a deductible loss for tax purposes.

Digital currency transactions will be exempt from value-added tax. Income generated from these transactions will be taxed under the same framework as income from securities transactions. As a result, the highest personal income tax rate on cryptocurrency will be capped at 15%.

“As a result of discussions with businesses, a decision was made on the advisability of taxing the financial result from mining as the fairest reflection of the results of this activity. This approach is aimed at observing a balance between the interests of businesses and the state,” the Finance Ministry said.

The initial cryptocurrency taxation bill was introduced in December 2020, with its first reading taking place in 2021. Recently, the Federal Tax Service of Russia proposed taxing unrealised gains for miners, adding complexity to the regulatory framework.

Additionally, the government has imposed restrictions on unregistered individuals, capping their Bitcoin mining to a maximum monthly power consumption of 6,000 kilowatt-hours.