Russia's central bank digital currency, the digital ruble, has moved closer to public usage with the passing of a new law on December 7. The law integrates the digital ruble tax code into the Russian tax system and sets a definitive launch date of January 1, 2025.
The digital ruble entered the operational phase following the July law signed by Russian President Vladimir Putin. Since then, it has become the third official form of the Russian currency, alongside cash and non-cash forms.
The signed document specifies that the digital ruble will function for payments and transfers. Russia has not allowed the digital ruble to be used for opening bank accounts or obtaining loans.
The new legislation establishes the "digital ruble Account" as a unique type of bank account within the tax code. This key definition creates a clear path for integrating the Ruble CBDC into everyday life for both commercial and individual use.
Transactions with the digital ruble will be taxed similarly to those with standard bank accounts. However, establishing and maintaining a digital ruble account follows distinct procedures.
For personal income tax, there are two notable points. First, the date of receipt of income for personal income tax purposes will be the date the digital rubles are transferred to the user's account. Second, there are amendments establishing special tax regimes for digital ruble accounts to guarantee accurate income and expense recognition.
The new document also offers incentives to push adoption and accelerate the integration of the digital ruble into everyday use, such as value-added tax (VAT) exemption for transfers and remittances. This privilege could even extend to bilateral trade with major partners like China, potentially driving the adoption of CBDCs as an alternative to traditional systems like SWIFT.
In order to promote compliance and accountability, the law empowers tax authorities to suspend activities on digital ruble accounts. The specific procedures for implementing such suspensions will be established through consultations between the Federal Tax Service and the Central Bank of Russia, including defining the process for informing digital ruble platform operators of any transaction suspension.
It establishes the possibility of foreclosing on digital rubles in cases where insufficient funds are present, including precious metals held across the taxpayers' various accounts. This can safeguard users against potential financial risks.
Upcoming nationwide usage
The new tax framework facilitates the expedited launch of the digital ruble, a key priority for the Russian government. Officials now aim to make the CBDC accessible to all citizens as early as 2024, accelerating the previously stated timeline of 2027 from the central bank.
According to the country's finance minister, Anton Siluanov, all Russians will have the opportunity to use digital ruble wallets for payments by 2024. Siluanov is known to be a staunch supporter of CBDC adoption. His ministry plans to pilot Treasury payments using digital rubles early next year.
"Next year, I am sure that we will all be able to try to open a digital wallet and make payments in a new currency," said Siluanov.
"This is the same ruble. It can also be exchanged for regular cash and non-cash rubles."
Siluanov sees the digital ruble as a potential tool for making welfare payments and issuing government subsidies. The ministry has also hinted at experimenting with "marked" digital ruble-powered child benefits and pensions in 2024.
In contrast, the central bank has been more hesitant to provide a timeframe for the digital ruble rollout. It was also cautious about the digital ruble's international potential. However, recent signs suggest they are warming up to the idea.
Russian central bank governor Elvira Nabiullina has hinted at the potential for "digital finance tools," possibly including the digital ruble, to play a significant role in international payments.