Crypto Tax Bill Proposed By Ukrainian Parliament

News, Regulation | September 18, 2018 By:

The Verkhovna Rada, the Ukrainian parliament, has proposed a bill that would tax residents’ crypto-related profits.

Initiated by 23 government officials, the tax bill proposes a 5 percent tax on profits that private individuals and corporate entities realize from trading their cryptocurrencies. The bill states that these profits must be reported separately from other forms of income. Once passed into law, businesses would see their taxation rate jump to 18 percent beginning on January 1, 2024.

The bill described cryptocurrency as a “form of a digital record on the distributed ledger that can be used as a mean of exchange, unit of account or a mean of storing value.” Tokenized assets, on the other hand, certify property or other rights of their holders that correspond to the obligations of an issuer.

The bill also suggests that the government should be regulating only the crypto-to-fiat transactions while being relieved from any involvement in the oversight of crypto-to-crypto trading. The goal of the bill is to increase state budget revenues by withdrawing large volumes of crypto operations from the grey market.

“Accordingly, the introduction of transactions with virtual assets in the legal field will [make it possible] to draw 1.27 billion hryvnia ($43M USD) to the budget annually from 2019-2024,” the bill said.

In addition to the crypto taxation bill, two other bills were filed in the Ukrainian parliament targeting the cryptocurrency sector, the “Circulation of Cryptocurrency in Ukraine” bill and the “Stimulating the Market of Cryptocurrencies and their Derivatives” bill.

In May of this year, Timur Khromaev, head of the Ukrainian National Securities and Stock Market Commission (SSMCS), revealed that the SSMCS will consider recognizing cryptocurrencies as a financial instrument. At the time, Khromaev said that the crypto industry has developed significantly over the last three years, causing the crypto market to become an “integral part of economic and financial relations.”