How does the Binance Tax Reporting API work?

At the end of July, the leading international exchange and blockchain ecosystem Binance announced the launch of a service to help withpayment of taxes on cryptocurrency.

This tool called Binance TaxThe Reporting Tool API can help exchange users generate reports for filing with the tax authorities, which reflect the movement of digital assets on the trading floor, as well as receive transaction history for more than one financial year.

How does the Tax Reporting service work?

The Tax Reporting Tool service only works whenintegration with third-party services for paying taxes, for example with Koinly, BearTax, etc. Integration with a third-party service can be carried out exclusively by the user independently. The Binance website provides detailed instructions in Russian.

Binance does not endorse anyspecific third party tax software. There are currently no analogues of third-party services with which the API of the “Tax Reporting” service can be integrated in the Russian Federation due to insufficient clarity on tax issues in this area.

It is important to note that in accordance with the currentThe Binance group of companies is not obliged to disclose information to the Russian tax, law enforcement and supervisory authorities by the legislation of the Russian Federation. An exception may be justified individual requests from authorized bodies, mainly within the framework of a specific criminal case.

Current status of cryptocurrency regulation in Russia

Federal law of 31.07.2020 N 259-FZ "On digital financial assets, digital currency and on amendments to certain legislative acts of the Russian Federation" ("Federal Law on CFA") entered into force on 01.01.2021 (with the exception of some provisions listed in Art. 27 of the law, which come into force later).

Previously adopted by-laws and judicial practice that had developed before are applicable to the extent that they do not contradict the provisions of this law.

The Federal Law on the CFA is a special act and takes precedence over the general norms of legislation regulating similar and similar relations and circumstances.

Adopted three acts affecting the applicationblockchain technology in the financial field. The Federal Law on CFA will be applied in conjunction with the Federal Law of 18.03.2019 No. 34-FZ "On Amendments to Parts One, Two and Article 1124 of Part Three of the Civil Code of the Russian Federation" that has already entered into force (gives the concept of digital rights, referring them to "other property "(Art. 141.1 of the Civil Code of the Russian Federation) and smart contracts, allows the conclusion of transactions in digital form) and Federal Law dated 02.08.2019 No. 259-FZ" On attracting investments using investment platforms and on amendments to certain legislative acts of the Russian Federation " ("Federal Law on crowdfunding").

Legal aspects of taxation of cryptocurrencies

The draft Federal Law on the taxation of cryptocurrencies passed the first reading in the State Duma (Draft No. 1065710-7 On amendments to parts 1 and 2 of the Tax Code of the Russian Federation), butat the moment there is no procedure for declaring and calculating the market value of digital assets.

Digital asset owners have the right to file a tax return and make tax payments, although the procedure is not yet transparent.

Tax is payable when income arises fromsale of property (“digital currency”), primarily for fiat currency. Determining the amount of income without selling for fiat, but in the form of exchange for cryptocurrencies and tokens, is difficult. There is a risk that the tax authorities do not recognize the value of cryptocurrencies, calculating the rates of the declarant.

An even more difficult situation will be in which it is necessary to reduce the profit for the expenses incurred to purchase digital property. A decrease in profit carries a great risk for the taxpayer:tax authorities will endeavor not to recognize any expenses that are not documented.

Any documents must contain the date, amountoperations come from a specific person. Electronic form is possible, but not always. Translation into Russian (certified) is required for any document.

Account statements, Binance wallets can berecognized or rejected by the tax office: the practice is just beginning to emerge. The Ministry of Finance has not yet confirmed the possibility of providing extracts from foreign crypto exchanges to confirm expenses. It is necessary to be guided by the general provisions of the legislation.

As a reminder, the tax billcryptocurrencies in Russia will be considered in the fall of 2021, similar to the bill in Ukraine. We will promptly inform you about all legislative initiatives, follow the news.

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