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Kazakhstan considers 15% crypto tax to pay for COVID-19

The country hopes to tax mining operations to fund relief efforts for the coronavirus pandemic

The government of Kazakhstan has revealed that it plans on imposing a 15% flat-rate tax on crypto mining. All the funds accumulated through this tax will be used to deal with the effects of COVID-19.

It appears that the coronavirus pandemic has urged the country to change its perspective on the matter, as analysts previously labeled crypto mining as a “purely technological process” and not an entrepreneurial activity. The original plan was for lawmakers to refrain from placing a tax on mining cryptocurrencies until the mined assets are exchanged for fiat money.

The government has been working on ways to regulate crypto mining activities, in accordance with the new electricity tariff rules that were imposed in the country.

Kazakhstan is an incredibly attractive location for people who are thinking of going into cryptocurrency mining because it has one of the lowest electricity rates in the world. In the northern regions of the country, one kilowatt per hour (kWh) costs less than one cent in US dollars.

Beyond crypto mining, Kazakhstan has also been proactive in the introduction of blockchain-based technologies into the local economy. It was one of the first countries in the world to announce the adoption of blockchain, and the then-President of Kazakhstan, Nursultan Nazarbayev, mentioned his interest in implementing blockchain within the taxation system, online cargo tracking and custom operations.

Kazakhstan also has its own hub for businesses in the financial technology industry. The Astana international financial Centre (AIFC), which was established last 2018, recently announced its plans to create a variety of legislative initiatives to help simplify access to financing for small to medium sized companies. This includes green financing instruments, venture financing and giving medium-sized companies the opportunities the opportunity to raise capital on the AIFC exchange in the segment of the regional stock market.

Despite the onset of the coronavirus pandemic, the AIFC reported to have registered 122 new companies in 2020, 70 of which were registered while the lockdown was in effect.

“We are pleased that the business is making decisions on the establishment of the AIFC, despite the pandemic.” Acting General Director of the AIFC Financial Services Authority, Mukhtar Bubeyev, said.

“We continue to work closely with the financial community to assess the economic impact of the pandemic on the activities of financial companies.”

President Kassym-Jomart Tokayev has affirmed that the AIFC plays a strategic role in the country’s economic recovery efforts.

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