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Russia has approved tax breaks for cryptocurrency issuers

As part of its continuous pro-crypto legislation, Russia adopted a draft bill exempting cryptocurrency issuers from VAT.

On June 28, the lower chamber of Russia's Federal Assembly passed a draft measure that would exclude cryptocurrency issuers from Value Added Tax (VAT).

Sanctions are more damaging to "unfriendly states" than to Russia.

The decision in late February to exclude Russia from the SWIFT system put pressure on the Russian banking sector.

However, there is mounting evidence that the sanctions are causing more harm to "unfriendly nations," particularly in the limited supply of oil, gas, and wheat.

Furthermore, on June 27, Russia missed a $100 million international bond interest payment for the first time in over a century. The Kremlin said that oil and gas earnings will allow it to satisfy its obligations.

The Finance Ministry also stated that it had carried out its responsibilities by depositing funds in its onshore National Settlement Depository (NSD). Sanctions, however, have prevented payments to recipients, which Kremlin spokesperson Dmitry Peskov claimed was "not our concern."

Russia adopts cryptocurrency

Russia has taken a harsh stance against bitcoin before the war with Ukraine began on February 24. The Central Bank of Russia produced a study in December 2021 warning of the hazards linked with digital assets, even advocating a full prohibition.

However, following the invasion, Russian officials softened their position and embraced the bitcoin business. With it came a slew of pro-crypto initiatives, including discussion of selling oil and gas to friendly nations in Bitcoin and allowing cryptocurrency mining.

Recently, Ivan Chebeskov, the Head of Russia's Financial Policy Department, stated that cryptocurrency may be used to settle foreign payments.

The measure proposing VAT exemptions for cryptocurrency issuers is the most recent action prompted by the current circumstances.

“exemptions on value-added tax for issuers of digital assets and information systems operators involved in their issue.”

It also establishes more advantageous tax rates for revenue received from the sale of cryptocurrency. The current rate of taxation for such transactions is 20%. However, according to the recommendations, the new rate would be 13 percent for Russian enterprises and 15 percent for foreign ones.

Before becoming law, the measure must be adopted by the Federal Assembly's upper house and signed by President Putin.

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