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Cryptocurrency owners in Russia may soon be left with the option to declare their crypto holdings to the taxman or face up to three years in jail if caught, according to new reports from local media.
The Russian Ministry of Finance has drafted an amended proposal to ensure all crypto holders in the country report the value of their digital assets for tax purposes.
New Crypto Tax Rules
The previous rule requires Russian citizens with small portfolios of at least 100,000 rubles (around $1,300) per year to report their tax authorities’ holdings. However, the new proposal has upped the number to an annual transaction worth more than 600,000 rubles ($7,800).
The amendment also requires crypto traders and investors with assets worth 45 million rubles (appr. $586,000) or more to declare their holdings to the tax authorities.
Taxpayers in both categories are required to disclose their holdings at least two times in three years. Citizens who fail to report the full amount of their crypto holdings will pay fines.
Report Crypto Holdings Or Go To Jail
Those who do not declare their holdings for three consecutive years will face even stricter punishment. Defaulters with up to $7,800 worth of undeclared transactions would face up to six months in jail. And those with up to $586,000 unreported transactions will face up to three years imprisonment.
According to the draft, the national tax agency will calculate the value of reported holdings. Since crypto prices fluctuate, the calculation will be based on the prices at the transaction time.
Citizens have up to April 30, 2022, to declare their crypto holdings for the next tax year. The regulators plan to pass the amendment into law by January next year.
The law also requires crypto exchanges and miners to report information about their operations and transactions to the country’s Federal Financial Monitoring Service.
The Finance Ministry believes the new amendments are in line with the guidelines published by the Financial Action Task Force (FATF) on money laundering.
Meanwhile, the Russian Central Bank published new rules in February to curb crypto transactions involving money laundering.