Russia is close to introducing tax legislation for cryptocurrency after the proposal was initially approved by the Russian parliament.

Russian state news agency reported “Ria Novosti”Yesterday, Wednesday, the State Duma and the lower house of the government approved a bill on crypto taxation.

The bill has been in the works for several years and makes amendments to the existing federal tax code.

The proposed law defines cryptocurrencies such as bitcoin as property while criminalizing non-declaration of cryptocurrency trading profits.

This includes residents of the country and foreign citizens, as well as domestic and international organizations based in Russia.

The new legislation introduces the requirement to report cryptocurrency transactions if their total value, for both incoming and outgoing transactions, exceeds 600,000 rubles (about $8,130) annually.

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This value is supposed to be calculated based on the price of the cryptocurrency market, however the exact mechanism for this is not detailed.

Late reporting or false information is subject to a fine of up to 10% of the largest total amount for one set of transactions, both incoming and outgoing.

The proposal also includes a penalty fee of up to 40% of the unpaid tax in the event of non-payment or underpayment of tax.

On a more positive note for long-term bitcoin holders, owning cryptocurrencies is a non-tax event provided it does not contain any transactions.

However, the exact mechanism for monitoring transactions is not entirely clear.

According to the paper accompanying the bill, the new legislation aims to tackle tax evasion, money laundering and other illegal activities.

The proposed law is currently in the hands of the Parliament’s Budget and Tax Committee before a second reading, which must submit amendments to the documents before March 18.

Despite separate legislation on digital finance that took effect in January that prohibits local residents from making cryptocurrency payments, Russia’s legal framework still suffers from a lack of a clear definition of terms such as “cryptocurrencies” or “digital currencies”.

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This further complicates the regulation of cryptocurrencies in Russia.

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