In the upcoming spring session, the value added tax (VAT) for DFAs will be the main topic of discussion, explained the senator:
“The Central Bank has already discussed the taxation of DFAs, and it is clear that improvements are necessary, particularly with regards to VAT. Currently, VAT is the most challenging issue, and appropriate adjustments are expected to be made in the State Duma.”
The DFA Law was implemented in January 2021, but the law governing the taxation of DFAs only took effect in mid-2022. According to this law, owners of digital assets are required to pay 13% of their income received from DFA issuers. Foreign companies are subject to a 15% tax. The legislation specifies that transactions involving digital financial assets are exempt from VAT.
There are currently several challenges in the market concerning the taxation of financial assets, according to market participants interviewed by Vedomosti. It is crucial to eliminate legal and tax arbitrage that disadvantages DFAs compared to traditional financial instruments.
Earlier reports from Kommersant revealed that participants in the Russian digital financial market are experiencing difficulties in attracting investors, particularly retail investors. The complexity of the registration process poses a significant obstacle for individuals entering the digital financial services market. Presently, due to restrictions imposed by the Central Bank of the Russian Federation, offering the majority of DFAs to private investors has become nearly impossible.
Recently, representatives from the Moscow Exchange predicted that the volume of the digital financial asset market in Russia will continue to grow and is projected to reach 250 billion rubles by 2024.