President of Kazakhstan Signs Bill Increasing Taxes for Crypto Miners
The President of Kazakhstan, Kasem Jumart Tokayev, has signed a bill to change the country’s tax code to establish higher tax rates for cryptocurrencies. This rate is based on the amount and average price of electricity used to mine digital currencies like Bitcoin. Kazakh President Togayev has signed a new law amending the country’s law “On Taxes and Other Compulsory Payments to the Budget” and resolutions improving the implementation of the Tax Code.
These amendments introduce different tax rates for cryptocurrency mining. Exact rates are determined based on the average cost of electricity consumed for minting coins in a specific tax period. They add up to 1 Kazakh tenge (ca. At $ 0.002 per kilowatt-hour (kWh), a miner can pay 25 or more tenge ($ 0.053) per kilowatt-hour, reaching 10 tenges if the electricity bill is in the range of 5 to 10 tenge ($ 0.011). – US $ 0.021).Cryptocurrencies that use electricity generated from renewable sources pay a very low rate of 1 ton per kilowatt hour regardless of cost. The surcharge went into effect on January 1, 2022, after the Central Asian country experienced a shortage of electricity over the past year. The shortfall is attributed to an influx of crypto miners after China decided to hit the industry in May 2021.
Kazakhstan has tried to limit cryptocurrency mining, impose restrictions on electricity supply during the cold winter months and close down mining in its regions. These measures have forced some companies to relocate to other mining areas or relocate much of their equipment abroad. In February, President Togayev ordered the relevant authorities to identify all crypto miners operating in Kazakhstan and increase their taxes. In April, state auditors chased down mining companies to use tax rebates they shouldn’t have. That month, the Nursultan government announced that it was preparing to increase the tax burden on miners, and one of the initial plans was to link the new tariff to the value of the printed digital currency. According to official reports, the new tax rules are expected to balance the load on the electricity grid and encourage the use of local electricity for mining.