Kyrgyz Republic’s lawmakers are looking to introduce a taxation bill for cryptocurrency mining which, if passed would make it the first piece of crypto legislation in the country. The bill would amend the Tax Code of the Kyrgyz Republic and bring crypto mining under its tax code. The bill would also set a clear definition of virtual assets and crypto mining.
This bill could really turn out to be a breakthrough decision for the cryptocurrency ecosystem in the country since the government prohibited the use of crypto as a mode of payment back in 2014. Additionally, the government has also put a ban on mining since September 2019.
The New Bill Could Bring In Extra Tax Revenue For The Government
Once passed, the tax bill could bring in $4.2 million in additional revenue for the government which has a current budget of $1 billion. The proposed bill would tax miners 15% on any revenue generated from selling mined crypto assets.
The parliament also discussed the electricity prices and premium rates for miners. A premium price of $0.05 per kilowatt-hour (KW/h) was decided by a council of experts in December last year. The average cost of electricity in the Kyrgyz Republic is $0.030 per KW/h.
While the bill looked set to obtain a parliamentary nod, the latest parliamentary deliberation, held on June 3rd, saw many lawmakers raise concerns over large scale crypto mining and its impact on the limited electricity that the country generates. Deputy Aaly Karashev pointed out that the country imports twice the amount of electricity it exports.
These concerns are valid, given the ban that came into force in September 2019 regarding mining activities, having been imposed because mining farms consumed much more electricity than nearby provincial areas like Issyk-Kul, Talas, and Naryn combined.
Maybe the flat tax and clear regulations would bring in an extra stream of revenue for the government and put a curb on illegal mining in the country.