Putin Approves Incorporation of Digital Ruble into Russian Tax Law
Russian President Vladimir Putin has given his approval for a new law that will include the digital ruble in the country’s tax code. The law adds terms such as “digital ruble” and “digital ruble wallet” to the code. It also grants bailiffs and court-appointed individuals the power to retrieve central bank digital currency (CBDC) funds from wallets if taxpayers do not have sufficient fiat in their bank accounts. Additionally, tax authorities are now able to suspend transactions on digital ruble wallets and request documentation from platform operators to confirm fund withdrawals from taxpayer accounts. The law also allows tax officers to transfer confiscated coins to the Russian Treasury.
This legislation marks the second major CBDC-related law passed in 2023, as Russia aims for a fast-tracked rollout. The Ministry of Finance previously announced plans for “all Russians” to have access to digital ruble wallets for making payments by 2024. However, the Central Bank contradicted this timeline, stating that a national rollout would not occur before 2025. Other key clauses in the law outline the Central Bank’s responsibilities as the operator of the digital ruble platform, taxation rules for transactions involving digital rubles (including VAT exemptions for account opening and holding), and regulations for the transfer of CBDC funds.
With ongoing US and EU sanctions targeting the Russian economy, Moscow views the digital ruble as a strategic tool for international trade. Government officials believe that the CBDC will play a crucial role in reducing costs and risks for domestic firms engaged in foreign trade. Deputy Minister of Finance Alexey Moiseev expressed the government’s eagerness to conduct business using the digital ruble as soon as possible. Russia is also looking to engage in cross-border CBDC transactions with the Eurasian Economic Union (EAEU) member states, which include Belarus, Kazakhstan, Armenia, and Kyrgyzstan.
Belarus and Kazakhstan are pursuing their own CBDC projects, emphasizing cross-border trading functions. Russia has also expressed interest in CBDC collaboration with China, although it remains uncertain whether China will pursue such a partnership. Beijing has recently proposed using its digital fiat for business transactions with Belt and Road Initiative (BRI) partners and Association of Southeast Asian Nations (ASEAN) member states. Currently, the Central Bank is conducting a pilot program for the digital ruble in 11 Russian cities involving 13 partner commercial banks. Next year, 16 banks, including the prominent Sber, will join the trial. The finance ministry aims to utilize the digital ruble for government subsidies and welfare payments by 2024.