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Tuesday, December 07, 2021

Cryptocurrencies can be potentially used to evade taxes: Russian Government

In Russia, cryptocurrencies are recognized as a type of taxable property.

By: Tech Desk | Pune |
Updated: November 23, 2021 5:32:49 pm
Cryptocurrency — digital money not backed by any nation — is famous for its wild and frequent gyrations. (Reuters)

Russian government fears that cryptocurrencies can cause “significant erosion” to the country’s tax base. Daniil Egorov, head of Russia’s Federal Tax Service (FTS), mentioned cryptocurrencies as a potential means for tax evasion.

When Egorov was asked in an interview with Russian media RBC Group, if he noticed any “innovative” tax evasion schemes recently, Egorov mentioned crypto. ”We are watching this market closely and understand that this payment system can significantly erode the taxation base,” he said.

Egorov noted that the government is looking to curb such activities instead of just identifying it. “We would like to find solutions that shut down a problem as a phenomenon rather than just identifying actions by a specific player,” Egorov asserted. “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.”

It is worth noting that in Russia, cryptocurrencies are recognized as a type of taxable property. The law on cryptocurrency taxation have passed one hearing in the Russian parliament in February, but hasn’t moved forward since.

The FTS chief points out that cryptocurrency transactions are traceable and the FTS is ready to deploy automated tracking systems to process big data volumes. “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,” he noted, as quoted by RBC media group.

Meanwhile, India is yet to legalise cryptocurrency and a regulatory bill is expected to be tabled in the Parliament’s Winter session. Last week, RBI Governor Shaktikanta Das once again raised concerns over cryptocurrencies. Speaking at the SBI Banking Conclave, he said that “there are serious concerns on macro-economic and financial stability.

More recently, Prime Minister Narendra Modi said while flagging cryptocurrency as one of the areas where they should work together to “ensure it does not end up in the wrong hands” and “spoil our youth”.

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