Russian Authorities Are Concerned About Cryptos as Means for Tax Evasion

Russian Authorities Are Concerned About Cryptos as Means for Tax Evasion

Daniil Egorov, head of the Russian Federal Taxation Service (FTS), is concerned that cryptocurrencies could be a path for tax evasion. During an interview with news agency RBC, Egorov mentioned that the tax authority is ‘closely watching’ the crypto market and assessing its potential to ‘significantly erode the country’s taxation base.

“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,” Egorov commented. Although the chief of the tax agency said that the matter should be addressed systemically, he didn’t provide further details in that regard.

Still, he recognized that the FTS uses blockchain technology to store electronic power of attorney letters. “We would like to find solutions that shut down a problem as a phenomenon rather than just identifying actions by a specific player,” Egorov pointed out.

In June, the Russian Foreign Minister, Sergei Lavrov, stated that cryptocurrencies could play a critical role in international settlement deals at the Primakov Readings Forum. The comments came in the context of the Minister’s speech, where he clarified that Moscow does not plan to abandon the US dollar completely.

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Lavrov commented that cryptos could fit in some international settlement’s use cases when the time comes. “I think the time will inevitably come when cryptocurrencies will play a very significant role [in trade and finance] and occupy a very significant segment of the international settlements sector,” he said.

Digital Ruble in the Making

Moreover, Russia has progressed further with its central bank digital currency (CBDC) initiative as the country is determined to develop a digital ruble prototype in early 2022 and is set to launch a pilot program. The Bank of Russia is reportedly planning to charge fees for all CBDC transactions. However, according to Prime, quoting Kirill Pronin, the Bank of Russia’s Director of the Financial Technologies department, the fees will still be lower than those charged for wire transfers.

Also, the transactions performed with CBDCs, digital ruble, will not be higher than those completed through the Russian Faster Payments System (FPS), an instant interbank transfers system.