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 4 related draft laws that aim to regulate mining, among alternative crypto activities, local media reported.
In accordance with the legislation, miners operating within the country are going to be able to buy power from the national energy system as long as it's 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 worth restrictions have been lifted for that excess quantity of electricity and insisted, quoted by Tengrinews, that trades are going to be governed by market mechanisms.
The bill additionally introduces 2 categories of mining licenses. the first type are going to be granted to entities that operate infrastructure such as data processing centers. they'll need to meet certain equipment, location, and security standards.
The second one are going to be issued to owners of mining hardware who rent space in crypto farms and don't claim an energy quota. Mining pools can need to abide by additional rules such as the requirement to own their servers based mostly in kazakhstan and comply with local information security regulations, Smyshlyaeva added.
The Central asian nation, that has become one among the world’s main crypto mining destinations since China cracked down on the trade in 2021, has blamed its growing power deficit on the influx of miners. in line with recent arrangements with Russia, Kazakhstan’s mining farms are going to 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 additionally thought about taxation. Crypto mining corporations are going to be subject to company income tax, calculated supported the worth of the digital assets received as reward. a similar tax for mining pools are going to be levied on their commission.
Individuals who carry out cryptocurrency transactions are going to be paying value added tax (VAT), the report revealed without providing further details or specifying the precise rates. Legal entities offering crypto exchange services also will have to pay corporate tax.
Smyshlyaeva remarked that the circulation and exchange of cryptocurrencies is prohibited in kazakhstan and therefore the trading platforms will only operate under the special legal regime of the capital International financial center (AIFC), with a license issued by the financial hub however without the tax advantages offered to other registered organizations.
The authorities also plan to ban the advertising of cryptocurrency transactions. At a similar time, totally different regulations have been adopted for secured digital assets, almost like people who apply to securities. A permission to issue and circulate such assets would depend upon the availability of collateral.
(Lubomir Tassev, Bitcoin.com, 2022)