Taxes on digital assets in the Russian Federation: what are token owners and issuers supposed to pay?
The draft Russian law on taxation of transactions with digital assets contains provisions on VAT, personal income tax and taxes on the profits of organizations.
Especially for the CEO of ForkLog “Unf Escort”, Sergey Leoshko and Maria Agranovskaya, managing partner of the law firm Grad, reviewed the requirements imposed by the authorities on CFA owners.
The services of the organizations that will issue, control and keep the files of the DFA requests are exempt from VAT, by analogy with the titles.
However, the sale of DFA itself is subject to VAT. Until March 9, 2022, the same principle applied to the sale of precious metals by banks to individuals.
“These standards have significantly reduced the investment attractiveness of precious metals in the eyes of investors. Apparently, the authors of the bill consider the market for digital assets so attractive that even a 20% VAT will not be able to dampen this interest,” suggests Sergei Leoshko.
All features of VAT calculation when using digital assets in foreign trade transactions, with the involvement of agents and other special cases from the point of view of this tax.
Those liable for VAT will be all legal entities that carry out the primary issue or the secondary transactions with CFA.
Income from the sale or ownership of digital assets must be included in the income tax base.
Expenses related to maintenance, the payment of income to the owner of the property or its repurchase can be taken into account for the calculation of corporation tax.
The rules for the single and uniform recognition (during the duration of the different CFAs) of expenses for income tax purposes are established. There is a procedure for accounting for VAT paid on the acquisition of property, if the organization is the last owner of such property.
Features for determining the tax base for operations with CFA will be prescribed separately. These assets will not be reassessed for corporate tax purposes.
“The bill provides for the features of the issuance and rotation of the digital financial market similar to the issuance and rotation of securities, including similar restrictions. For example, income from the issuance of digital financial assets, for which the repayment period is not defined or is greater than 10 years, is recognized on the date of expiry of the period of ten years from of the date of issue of these assets”, explains Maria Agranovskaïa.
Profit or loss from DFA transactions can be determined together with transactions in non-transferable securities and non-negotiable derivative financial instruments, separately from the overall tax base.
The possibility of hedging using DFAs and other special cases is provided for these assets.
Revenues from transactions with DFA should be determined net of the costs of their acquisition and transaction. However, the bill also requires documentation of these expenses.
“What kind of documents can confirm expenses for the purchase of digital assets, changes are not deciphered. The right to a deduction in the absence of supporting documents (conditional expenditure of 20% of the amount of income) is expressly prohibited by the bill. It remains to hope for official clarification on how to document the costs of CFAs purchased in 2021 and before,” notes Sergey Leoshko.
It will be possible to include exchange fees in expenses , operators, fees for the services of registrars, banks and other future participants in the official turnover of the DFA in the Russian Federation.
At the same time, according to the bill, losses resulting from digital transactions can only be compensated by income from other similar transactions – it will not be possible to reduce other income subject to income tax. natural persons. It is also necessary to separately consider income associated with the ownership of assets, for example, coupon or interest income, dividend payments to holders, etc.
In general, the procedure introduced is similar to the personal income tax rules for income from trading and holding securities. DFA costs that will produce securities at maturity can be deducted from the income of these securities, but it is better to analyze this and other special cases in advance.
Income and expenses for transactions denominated in foreign currencies shall be converted into rubles at the official exchange rate of the Central Bank of the Russian Federation, established on the date of actual receipt of income or expenses.
All individuals must declare and pay personal income tax on income from transactions with CFA tax residents of the Russian Federation, which arises from the already existing norms of the Tax Code. The bill will consolidate the obligations of tax agents of legal persons in relation to the income from tax rulings paid by them to natural persons.
“Of course, this will make life easier for individuals, since all tax calculation functionalities, as well as the transfer of personal income tax itself, will be entrusted to bodies officially working with the CFA. The main thing is that such organizations appear”, sum up the lawyers.
The changes introduced aim to provide clear rules for the taxation of income derived from trading or from CFA ownership. Although the bill comes into force one month after its publication, it provides for the application of new tax rules to legal relationships born from January 1, 2022, that is to say retrospectively.
At the same time, experts advise separately on the impact of the document on each specific transaction study.
Previously, ForkLog reported that the digital asset tax bill does not affect the cryptocurrency market in the Russian Federation.
The taxation of transactions with crypto-currencies will be prescribed separately and may be adopted in parallel with the bill “On digital currency”.
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