There is a reduced interest by Russians to pay taxes. After some opinionated assessments, the blame was pushed to cryptocurrencies and mass exposure to cryptocurrencies. With this, a bill has been passed into the law so that this menace, as the government views it, can be stopped. In a recent interview Daniel Egorov (the Russian Federal Taxation Service head) had with RBC local publication, he said, "Cryptocurrency can erode the tax database of the Russian, and as such, the government will have no means of providing basic amenities for its people of which tax is the medium of financing them." One may wonder how the discovery was made. Usually, the government can know how much a company makes and how much their tax is supposed to be as all their transactions go through the bank system, and they confirm through the record books of those companies. Now, these companies no longer make transactions using the banks but rather via crypto platforms as they deem fit hence making the government ignorant of profit being generated and the tax which is supposed to be remitted is not remitted; which lawmakers referred to as tax evasion or tax exemption.
Who is at fault?
In an event with Blockchain Life, the founder of The Russian Cryptocurrency, Sergei Khitrov, said the Russian cryptocurrency businesses per annum can generate more than $4 Billion in tax. Still, the local crypto community demonstrates what he refers to as a total failure by not paying taxes which he blames for the lack of understanding of how taxes can be paid on crypto.
Pragmatically speaking, we cannot ascertain whether the people are at fault or not, but we truly know that tax not being paid is an act of selfishness and ignorance. In another way, one may say the government themselves are at fault because it looks like an attempt to stop what is unstoppable and, as such, a way of sidelining its citizens from being benefactors of global opportunities.
Monitoring Cryptocurrency Markets to Prevent Tax Exemptions
The concluding keynote statement of Egorov in the interview states that "even in the digital space, you will still leave a trail somewhere, and it is only a matter of time of which such trail will be identified." This statement then gives us a clue of what actions and measures the government of Russia is putting into ensuring that monitoring of the cryptocurrency market is done. Although many have assumed that this will bring a sort of ban to cryptocurrency as this statement came after the Bank of Russia announced their proposal to introduce criminal liability for illegal circulation of all digital financial assets as part of their market and financial goals for the year 2022 which will last up until 2024 aside cryptocurrency tax that will be levied on those trading. We cannot fully say that this or that is bound to happen, but we can peep into what decision they are taking from what they are saying.
Automated Tracking Systems
Can the cryptocurrency market be tracked? This is one major question many people are pressing to know. Just like Erogov said, every road you pass through will always leave a footprint or a trail that is always traceable. This brings us to the fact that cryptocurrency can be tracked. According to many reports and research, it has been discovered that all cryptocurrency coins (i.e., Bitcoins, Ethereum, e.t.c. including the Russian ETF) and their transactions can be traced and are made public. For instance, Bitcoin addresses are the information needed to identify, trace and know where bitcoins are being sent to or received as the case may be, thereby rendering all crypto transactions unable to remain completely anonymous.
The Russian FTS are currently planning on different automated tracking systems that will be used to track huge volumes of data, and from there, those meant to pay taxes will be accustomed. This implies federal taxation will be done on all crypto traders' accounts from exchanges like binance, Redot.com, coinbase, et al.
The Russian FTS Cryptocurrency Tax Bill
Russia's cryptocurrency tax bill was passed for the first hearing in February 2021. The law demands that every cryptocurrency trader, including bank transactions that signate crypto involved, which are above $7,800 when added up for a year, should be reported. This law further stops every Russian civil servant from legally owning cryptocurrency or associating with one. However, many Russians are still waiting for the second sitting of this bill. In addition, as part of the Russian financial market goals for 2022 to 2034, a central taxing procedure will be set for every cryptocurrency transaction that takes place around the banking system, coupled with the fact that proposition was made in November 2021 to stop the illegal flow and circulation of digital currencies within the countries.
Pioneer of Cryptocurrency Taxation
Russia is the first country to start a cryptocurrency tax. However, this does not settle well with many cryptocurrency communities, especially those who are outside Russia. This is also leading to different agitation as it seems the law is sabotaging people from making progress or helping people get out from the poverty level they are in. Many people leaving CEX and use VPNs to access DEX projects to trade freely. However, these agitations are coming from people who do not understand the effect on the amount of tax generated whenever taxes are not being paid. Cryptocurrency taxation is a good thing because it can be used to stabilize the crypto markets among crypto investors.
Conclusion
Come to think of it, the future of cryptocurrency is still so much dependent on the government and its decisions. Just as India prime minister; Narendra Modi said, "cryptocurrency is one area where all of us need to work together to ensure it does not end up in the wrong hands, nor does it have to spoil our youth. One of the side effects that cryptocurrency can bring to young minds is to cause and encourage laziness, and this is one thing most governments do not want to happen as this will destroy the moral foundation they seek to uphold. In Reuters article report for October 21, the Russian federal government only bans the purchase of goods and services using crypto. Still, its citizens were not banned from investing in cryptocurrency and its allies, and crypto trading platforms like the Redot exchange and other centralized and decentralized exchanges are still fully operational..
In conclusion, the faster the government accepts digital money as a global payment platform, especially being in the digital revolution, the better it becomes regarding geometric growth and development for the country itself.
