26 Jul, 2024

Russia Legalizes Crypto Mining and Trading

In a surprising legislative shift, Russia's parliament has approved a bill permitting companies to use cryptocurrency for international trade, aiming to enhance trade relations and circumvent Western sanctions. The bill, which also legalizes cryptocurrency mining, is set to take effect on September 1st, 2024, pending final ratification by the upper parliamentary house and the President’s office.Legalizing Crypto MiningAs part of this new law, cryptocurrency miners will be required to report suspicious transactions to Rosfinmonitoring, Russia's anti-money laundering agency. Anton Gorelkin, one of the bill's authors, indicated that the legislation would be "fully adopted before the end of the Duma’s spring session," concluding on August 5th.Despite President Vladimir Putin's concerns about the potential strain on electricity resources due to increased Bitcoin mining, the State Duma appears committed to regulating the industry rather than imposing a ban. Putin highlighted the risk of electricity shortages in some regions, which could impact new businesses, residential areas, and infrastructure projects. However, the legislative move underscores Russia's intention to integrate cryptocurrency into its economic framework.A Potential Economic $570 Million WindfallThe legalization of crypto mining is anticipated to generate substantial economic benefits, with lawmakers projecting an additional $570 million in tax revenue. This revenue is expected from taxes on profits from industrial crypto mining, which currently lacks legal status. Bringing these operations under regulatory oversight aims to secure financial gains and enhance cross-border settlement options.Legislative BattleThe bill's journey to legalization has been lengthy, with numerous revisions over the past year and a half. Following a directive from President Putin, the bill has been presented to the State Duma. Valery Seleznev, the first deputy chairman of the State Duma Committee on Energy, expressed confidence in the bill's passage, although some amendments are expected in subsequent readings.Key provisions include mandatory income declarations for crypto miners, the establishment of a national registry for approved miners, and the creation of a federal executive body to oversee compliance. The Central Bank of Russia initially proposed that all mined cryptocurrencies be sold on foreign exchanges to prevent them from entering the Russian economy. However, this suggestion met resistance from various government bodies concerned about potential money laundering risks.Future Considerations and Tax ProposalsTo expedite the bill's passage, tax-related provisions will be addressed in a separate bill amending the Russian tax code. Proposals include imposing income tax on mining profits and possibly an excise tax on electricity used for mining. Additionally, the bill may allow Russian regions to limit or ban mining operations to prevent excessive strain on local electricity grids.As Russia moves into this new regulatory era, the implications for its economy and the global cryptocurrency market are significant. The upcoming changes are set to reshape Russia's approach to digital assets, potentially positioning it as a key player in the global crypto landscape.

22 Jul, 2024

Laos to Raise VAT to 10% on Digital Platforms

Starting 1 August, digital platforms like Google, Facebook, and Amazon will enforce a 10 percent value-added tax (VAT) on customers in Laos, following the country’s VAT increase from 7 percent.The three major platforms have been notifying users about the upcoming changes. This VAT adjustment will affect various services involving customer purchases on these platforms.Before the changes take effect, users are required to provide their Laos Tax Identification Number (TIN) to update their information. Once updated, the platform’s TIN will be reflected on their invoices.The VAT increase, first announced in March, is part of broader efforts to enhance state budget revenue and support economic and social development.The increase will also apply to a range of transactions, including imports, goods, general services, mineral imports and supply, and electricity usage.For the past two years, Laos has maintained a VAT rate of 7 percent. However, given the country’s current economic challenges, international experts and organizations, such as the World Bank, recommended returning to a 10 percent VAT rate to prioritize tax collection and replenish the state budget.After enduring economic turmoil for the past two years, Laos has implemented various measures to address these issues, but with limited success.On 15 July, Lao President Thongloun Sisoulith directed the government to take decisive action to halt the economic challenges, particularly the soaring inflation rate and the ongoing depreciation of the Lao kip currency. The president recommended increasing foreign reserves, curbing non-essential imports to stabilize the economy, and urging debt collection and asset auctions to enhance financial integrity.