Russian Government Increases Scrutiny of Crypto Market to Trace, Prevent Tax Evasion

The Russian government aims to identify how cryptocurrencies can help people skip paying taxes, while exploring ways to respond to such instances.

Russian Government Increases Scrutiny of Crypto Market to Trace, Prevent Tax Evasion

Photo Credit: Alesia Kozik/ Pexels

Holding undeclared cryptocurrency is a criminal offense in Russia

Highlights
  • Crypto space continues to remain under heavy monitoring in Russia
  • Officials fear that cryptocurrencies can dent tax base of Russia
  • Other nations including India are working on taxing cryptocurrencies

The crypto market is under high scrutiny in Russia as the government there is trying to prevent people from evading taxes using these untraceable cryptocurrencies. During an interview, Danniil Egorov, the head of the Russian Federal Taxation Service (FNS) expressed concerns about the negative impact, cryptocurrencies could make in the national treasury if not monitored properly. According to Egorov, these decentralised crypto tokens are capable of causing “significant erosion” to Russia's tax base. The FNS is now exploring ways of responding to crypto tax evasions as well.

“If we talk about cryptocurrencies, then we are now quite closely engaged in this market, realising that this system of calculations can create a fairly significant erosion for the tax base,” a report by Russian media RBC Group quoted the tax official as saying on Monday, November 22.

Revealing plans of installing automated tracking systems to process big data volumes, Egorov said that it is only a matter of time that the “untraceable” link that makes the crypto space unique, would become traceable.

“Technologies are used, anonymisation is used in terms of providing services by various fraudsters, of course. When you get into the digital space, you still leave a trail somewhere. And it's a matter of time before this trail is identified,” the FNS official added.

Presently untraceable in nature, cryptocurrencies are decentralized digital finance system where records are maintained using cryptography, and not any bank or physical intermediary.

As of January 1, 2021, cryptocurrencies were declared “allowed” in Russia — but not to be used as an exchange for goods and services. Russians can mine, trade and hold cryptocurrencies — but using them as a payment option can push people behind the bars, as per a report by Forbes.

While the Russian government has spoken about creating the country's own regulated digital currency, holding undeclared cryptocurrency between $1,300 (roughly Rs. 97,500) and $13,000 (roughly Rs. 9.7 lakhs) is a finable and jail-time offence in the nation.

Regulating Cryptocurrency Around the World

Along with Russia, other nations are also looking at ways to stitch taxation with cryptocurrencies.

In India, for instance, the federal finance ministry has formed a new committee to find out if income made by cryptocurrency trading could be taxed.

Earlier this month, US President Joe Biden also signed a new law which includes tax reporting provisions that apply to cryptocurrencies.

Meanwhile, the cryptocurrency market is booming internationally. Presently, the global crypto market capitalisation is around $2.9 trillion (roughly Rs. 2,15,66,720 crore) as per the data by CoinMarketCap.


Interested in cryptocurrency? We discuss all things crypto with WazirX CEO Nischal Shetty and WeekendInvesting founder Alok Jain on Orbital, the Gadgets 360 podcast. Orbital is available on Apple Podcasts, Google Podcasts, Spotify, Amazon Music and wherever you get your podcasts.
Affiliate links may be automatically generated - see our ethics statement for details.
Comments

For the latest tech news and reviews, follow Gadgets 360 on Twitter, Facebook, and Google News. For the latest videos on gadgets and tech, subscribe to our YouTube channel.

Further reading: Russia, Cryptocurrency, Tax, Tax Evasion
Radhika Parashar is a senior correspondent for Gadgets 360. She has been reporting on tech and telecom for the last three years now and will be focussing on writing about all things crypto. Besides this, she is a major sitcom nerd and often replies in Chandler Bing and Michael Scott references. For tips or queries you could reach out to her at RadhikaP@ndtv.com. More
Swiggy One Membership With Free Unlimited Deliveries, Up to 30 Percent Off on Food Orders Launched
Redmi Note 11T 5G Specifications Teased Ahead of India Launch

Related Stories

Read in: हिंदी
Share on Facebook Tweet Snapchat Share Reddit Comment

Advertisement

Advertisement

Advertisement

© Copyright Red Pixels Ventures Limited 2021. All rights reserved.
cryptocurrency
Listen to the latest songs, only on JioSaavn.com