The head of the FTS, Daniil Egorov, said that the Russian Federal Tax Service (FTS) is actively monitoring the cryptocurrency market in order to prevent tax evasion.

On Monday, Egorov said in an interview with local bank RBK that cryptocurrencies have the potential to cause “significant erosion” to Russia’s tax base.

The official said cryptocurrency transactions are still being tracked and must be reported, adding that FNS is ready to deploy automated tracking systems to handle large amounts of data.

“When you enter the digital space, you still leave footprints somewhere. And the definition of this path is a matter of time, “- said Egorov.

The official also noted that the FNS is currently working on ways to respond to crypto evasion practices, as the authorities appear to be curbing such activity rather than merely disclosing it. “We want to find solutions that close the problem as a phenomenon, and not just determine the actions of a particular player,” added Egorov.

Russia’s State Duma approved a bill on crypto taxation in its first reading in February 2021 that requires residents to report cryptocurrencies totaling more than $7,800 annually. To continue the second reading, in mid-October, the deputies decided to appoint a responsible commission – the State Duma Committee on Budget and Taxes.

According to Sergei Khitrov, founder of the Russian crypto event Blockchain Life, Russian crypto companies are likely to collect up to $4 billion in taxes annually. According to him, the local crypto community has so far shown a “complete inability” to understand how to pay taxes on cryptocurrencies.

On this topic: House approves trillion dollar infrastructure bill with cryptocurrency to endorse Biden

The news comes as US lawmakers are resisting changes to tax reporting rules for cryptocurrencies over $10,000 in the recently passed infrastructure bill. The bill was originally approved by the Senate in August, which was met with a proposal to compromise a group of six senators, including pro-bitcoin (BTC) Senator Cynthia Lamis.

Source: CoinTelegraph