The mining of cryptocurrency is not spelled out in the legislation. However, there is a way to work within the legal framework
In the second quarter of 2021, Russia ranked third in the world in bitcoin mining, according to the University of Cambridge. The country's share reached 11%. This happened due to the fact that the share of China, which until recently was the largest mining center, fell from 46% to zero in four months.
At the same time, in Russia, activities for the extraction of cryptocurrency are not legally regulated. In June, the head of the State Duma Committee on the Financial Market, Anatoly Aksakov, said that in the country "they forget about mining, this business is leaving." However, in mid-October, the governor of the Irkutsk region, Igor Kobzev, complained about a significant increase in energy consumption due to underground miners, proposed to recognize the mining of cryptocurrency as a type of business and introduce increased electricity tariffs for miners. As a result, the Ministry of Energy supported the idea of special electricity tariffs for miners. Now the authorities are "working on the issue of electricity."
Mining in Russia today is regulated by general rules on entrepreneurship and taxation, noted Efim Kazantsev, a member of the Commission on the Legal Support of the Digital Economy of the Moscow Branch of the Russian Lawyers Association. According to him, there is no special regulation in the mining industry, and from the point of view of the state, mining is not much different from any other activity where a person buys a machine for himself, does something on it and sells the results.
How miners work now
Bitcluster co-founder Sergey Arestov told how Russian mining companies work:
The company buys computing equipment (ASIC), then leases the computing power, for example, to a foreign organization that is registered on a crypto exchange. Electricity and maintenance costs are deducted from the income received, leaving the profit with which you need to pay taxes.
“The situation will be simplified when the registration of Russian LLCs is allowed on crypto exchanges. As far as I know, large exchanges already have pilot projects, ”Arestov said. He added that computing power exchanges may appear soon.
How to register mining from a legal point of view
There is no legal definition of mining in Russia. At the same time, the tax authorities may consider that mining has signs of entrepreneurial activity within the meaning of Art. 2 of the Civil Code of the Russian Federation (an independent activity carried out at its own risk aimed at systematically making a profit from the use of property, the sale of goods, the performance of work or the provision of services), explained Dmitry Kirillov, a lawyer and teacher at the Moscow Digital School.
For this reason, a person who is going to constantly engage in mining should register in advance as an individual entrepreneur or establish a legal entity, the expert noted. When registering, you must select the type of activity, the most suitable OKVED codes for mining are 63.11 "Activities for data processing, provision of services for the placement of information and related activities" and 63.11.1 "Activities for the creation and use of databases and information resources".
How to pay taxes
If the estimated income from mining does not exceed 150 million rubles per year, you can use a simplified taxation system with a tax rate of 6% on income. This will remove most of the tax burden and eliminate the need to justify the costs of these activities, as with the 15% rate of income minus expenses (although expenses will still have to be recorded). In all cases, an annual tax return will be required, Kirillov warned.
If a miner expects that his entire annual income, including mining income, will not exceed 2,4 million rubles, and he does not plan to hire workers, he can register not as an individual entrepreneur, but as a self-employed person. This regime allows the application of reduced rates of tax on professional income (6% or 4% of income) and not filing a tax return, fixing income online through a special application of the Federal Tax Service.
When conducting mining, you will have to take into account the restriction established by Art. 14 of the law on digital financial assets - Russian residents are not entitled to accept cryptocurrency as a counter-provision for goods, works or services. Responsibility for violating the ban has not yet been established, but miners should think about the correct documentation of activities right now.