Crypto transactions must be reported in Russia, failure could be a criminal offense

Crypto transactions in Russia
  • Crypto transactions in Russia that are not reported could constitute a criminal offense per proposal drafted by the Ministry of finance
  • Drafts of several amendments propose severe penalties, including the hard labor
  • Ministry of Finance plans to discuss this proposal with relevant ministries, but the ones that are known for supporting the crypto industry were not invited

According to reports of Russian daily newspaper Kommersant, the Russian Ministry of Finance has drafted amendments of several laws that impose severe punishments on failure to report cryptocurrency transactions for tax purposes. These amendments are to the Criminal Code, the Criminal Procedure Code, the Administrative Code, the Tax Code, and the money laundering prevention law.

For this week, a meeting of representatives of several Russian ministries is scheduled to occur in the Ministry of Finance. The subject of this meeting will be drafts of amendments of the laws that will need to be changed in the wake of the planned start of enforcement of the law “On digital financial assets, digital currency, and on changes in separate legislative acts of the Russian Federation.”

The previous version of these amendments have caused a negative reactions from the public due to its harshness. These drafts look to be even harsher toward users of cryptocurrencies and bring even more confusion to the public.

Crypto transactions will have to be reported for tax purposes

Some of the harshest changes are those concerning the introduction of penalties for failure to report annual cryptocurrency transactions for tax purposes. In cases that involve a individuals with an annual crypto transactions above a hundred thousand rubles ($1,296), they could face a fine of 30 percent of the value of unreported transactions. This fine can be no lower than 50 thousand rubles ($648).

Drafts of the amendments involve more than just fines. In case of the annual crypto transactions in excess of one million rubles ($12,964), failure to report to tax authorities is classified as a criminal offense that can carry a penalty of up to three years of prison Worse yet, it can include forced labor as an option.

The amendments were drafted in a hurry

This new draft has the appearance of being put together in a hurry. According to Kommersant, it contains definitions of criminal liabilities for legal entities. Such a concept doesn’t exist in the Russian criminal code, and only private persons can be held responsible for crimes.

For some Russian legal experts, another oddity of these amendments is the requirement of broadly defined cryptocurrency organizations, including foreign companies. The consequence of this definition is the requirement that foreign exchanges and wallet providers submit quarterly crypto transactions reports to Russian tax authorities. This requirement is unenforceable in the eyes of legal experts.

Additional confusion is the inclusion of the use of cryptocurrency as an aggravating circumstance in the commission of a crime. This provision can be used in cases of crypto transactions involved in the purchase of prohibited goods. By Russian legal experts, it is seen as unreasonable as currently, the use of any currency in the commission of criminal acts is seen neither as aggravating nor mitigating circumstance.

Another fact that only increases confusion surrounding this proposal is that to the meeting in the Ministry of Finance were not invited representatives of the Ministry of Economy, Ministry of Justice, or Ministry of Digital Science. According to Kommersant, all three of them have expressed in recent months criticism of existing intentions in parts of the Russian government to place restrictions or ban cryptocurrency transactions.

Gorica Gligorijevic

Gorica Gligorijevic

Gorica is a Serbian journalist with more than a decade of experience in print, web, TV, radio journalism, and the publishing industry. Past several years dedicated to web journalism and cryptocurrencies trading and investing.

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