BTCTN - 12/8/2022 4:07:52 PM - GMT (+0 )
Companies extracting cryptocurrencies in Kazakhstan will be allowed to purchase only excess electricity on a government-controlled market. The decision comes with new legislation approved by lawmakers which regulates the activities of the industry and the taxation of its profits.Law to Regulate Crypto Mining in Kazakhstan, Change Licensing Rules
The lower house of Kazakhstan’s parliament, the Mazhilis, has adopted the bill “On Digital Assets of the Republic of Kazakhstan” and four related draft laws which aim to regulate mining, among other crypto activities, local media reported.
In accordance with the legislation, miners operating in the country will be able to buy power from the national energy system only if it has a surplus to offer, and exclusively through the KOREM exchange, the country’s centralized electricity market.
Commenting on the new regime, Mazhilis member Ekaterina Smyshlyaeva pointed out that price restrictions have been lifted for that excess amount of electricity and insisted, quoted by Tengrinews, that trades will be governed by market mechanisms.
The bill also introduces two categories of mining licenses. The first type will be granted to entities that operate infrastructure such as data processing centers. They will have to meet certain equipment, location, and security standards.
The second one will be issued to owners of mining hardware who rent space in crypto farms and do not claim an energy quota. Mining pools will have to abide by additional rules such as the requirement to have their servers based in Kazakhstan and comply with local information security regulations, Smyshlyaeva added.
The Central Asian Nation, which has become one of the world’s main crypto mining destinations since China cracked down on the industry in 2021, has blamed its growing power deficit on the influx of miners. According to recent arrangements with Russia, Kazakhstan’s mining farms will be supplied with Russian electricity, too.Cryptocurrency Miners to Pay Corporate Tax on the Value of Their Reward
The authors of the law, which was approved on first reading in October, have also thought about taxation. Crypto mining companies will be subject to corporate income tax, calculated based on the value of the digital assets received as reward. The same tax for mining pools will be levied on their commission.
Individuals who carry out cryptocurrency transactions will be paying value added tax (VAT), the report revealed without providing further details or specifying the exact rates. Legal entities offering crypto exchange services will also have to pay corporate tax.
Smyshlyaeva remarked that the circulation and exchange of cryptocurrencies is prohibited in Kazakhstan and the trading platforms can only operate under the special legal regime of the Astana International Financial Center (AIFC), with a license issued by the financial hub but without the tax benefits offered to other registered organizations.
The authorities also plan to ban the advertising of cryptocurrency transactions. At the same time, different regulations have been adopted for secured digital assets, similar to those that apply to securities. A permission to issue and circulate such assets would depend on the availability of collateral.
Do you think Kazakhstan will remain a hotspot for crypto mining after the new legislation is enforced? Tell us in the comments section below.
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