Five years after placing an outright prohibition on cryptocurrencies and tagging them as illegal means of payment within its borders, Kyrgyzstan, officially the Kyrgyz Republic, has reportedly proposed a draft law to tax, directed towards crypto mining taxation.
According to reports from local media outlet Kabar, the country’s Ministry of Economy submitted a draft law “On Amending the Tax Code” with focus on introducing taxation to cryptocurrency mining activities.
The Ministry believes that this move will not only help to increase the “state budget revenues” but will also promote the universal principle of fair taxation in Kyrgyzstan, regardless of the type of legal business involved.
Since crypto miners are paid when they mine cryptocurrencies, leading to the creation of new assets which thus generate income, the Tax Code of the country requires such income to be taxed.
The document, however, reveals that the taxation on crypto mining will be cover two possible options with the first being the taxation of income generated and the second would be on the expenses (like electricity) incurred during the mining operation.
Although the country is yet to reverse its ban on virtual currencies, crypto mining activities and the use of blockchain technology are legal.
There are about 80,000 cryptocurrency mining devices in the Kyrgyz Republic, which can allegedly generate about 300 million som ($4.2 million) if crypto mining activities are taxed, an amount which is significant for the country’s budget, as its current annual budget is reportedly around $1 billion.