Bitcoin miners in Kyrgyzstan will soon be paying taxes to the state as the government looks to raise funds for COVID-19 recovery plans.
Outside China, Kyrgyzstan controls the third-largest share of the global Bitcoin (BTC) mining hash rate. Recently, governments in West and Central Asia have begun to draft policies targeted at getting the most from their local crypto mining markets.
Bitcoin Miners to Pay 15% Tax in Kyrgyzstan
According to a report from local news media in the country, the proposed draft seeks to amend the current tax registration and filing procedures to include crypto mining activities. An excerpt from the document reads:
Thus, a taxpayer intending to pay mining tax is obliged to submit an application for its registration as a payer of mining tax to the tax authority at the place of tax registration.
If passed, the proposed plan from Kyrgyzstan’s Ministry of Economy will see crypto miners pay up to 15% in taxes. Furthermore, the new taxation policy requires the country’s tax office to enter information on the crypto miner, set the tax rate during the application stage, fill a FORM STI-025 taxpayer registration card, and provide a copy of said card to the applicant.
Apart from the planned tax rate, mining activities in Kyrgyzstan will also fall under a new electricity tariff regime. Kyrgyzstan’s crypto mining taxation plan is reportedly part of the government’s efforts to raise its internally generated revenue in light of the ongoing COVID-19 pandemic.
Kyrgyzstan’s relatively cheaper electricity rates have attracted more mining firms to the country. However, its hashing power is still small compared to neighboring Kazakhstan and China.
Central and West Asia Looking Towards Crypto Mining
The news from Kyrgyzstan is the latest government crypto mining strategy coming out of Central and West Asia. Crypto mining falling under a taxation regime may also provide the first step in creating a legal framework for cryptocurrency commerce in the country.
Earlier in May 2020, Iranian President Hassan Rouhani ordered central bank officials to develop a national cryptocurrency mining strategy. Iran currently has an estimated 4% of the entire Bitcoin hash rate due to the country’s cheap electricity prices.
Rising hash rate for countries like Iran and increasing investments from North American mining firms might see China’s dominance in the arena decline. As previously reported by BeInCrypto, Iran officially legalized crypto mining back in August 2019.
[Editor’s Note Aug 7, 2020, 10 AM UTC]: Kyrgystan was incorrectly referenced throughout our original report as ‘Kazakhstan.’ The content and countries have been updated to reflect this.