As transactions in cryptocurrencies are on the rise in Ukraine, the country’s government is unsure about taxation of digital assets. However new laws could be introduced soon to clarify the legal status of both cryptos and exchanges.
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Ukraine Seeing More Crypto Transactions
More and more retail outlets are accepting cryptocurrencies. Most recently, the news that the historic Bessarabsky produce market, located in the heart of Ukraine’s capital, Kyiv, had begun to accept crypto, made the headlines.
Buyers at the market, which is frequented by locals and foreign tourists alike, can now pay for fruit and vegetables with a variety of cryptocurrencies, including bitcoin, bitcoin cash, ethereum, nano, dash, waves, EOS, and NEM.
However, despite the growing turnover of cryptocurrencies in the country, authorities apparently have few ideas about how to tax the population’s and businesses’ crypto revenues and transactions.
Need for a Clearer Legal Status
In a recent interview with local newspaper Ekonomicheskaya Pravda, deputy finance minister Sergei Verlanov admitted that under existing law, income tax cannot be applied to crypto transactions because cryptocurrencies have no legal status in the country.
Verlanov called for quicker progress on clarifying the legal status of crypto in the country, which would allow fiscal authorities to impose taxes on profits from crypto mining and transactions. Still, he said, he was uncertain about the size of the income tax on crypto and whether the existing income tax rate of 19.5 percent would be applicable to crypto.
According to Verlanov, individuals shouldn’t worry about filing taxes for their crypto transactions, but taxes should be automatically deducted from their profits by crypto exchanges, which should acquire the status of tax agents.
Last month, Ukraine’s national commission for securities and the stock market said it is in the process of penning a draft law, which would grant crypto currencies the status of official financial instruments. The law would introduce the same treatment for digital assets as what is currently applied to securities and stocks.
At this point, it is still unclear when the draft law could be completed, but in accordance with some reports, it could be submitted for consideration to Ukraine’s parliament, the Supreme Rada, as early as in September.
Not many specifics have been revealed so far, but one idea that has made it to the media is that a grace period for taxation of crypto transactions could be introduced through 2025. During that period, profits from crypto assets will be taxed at a low rate of 5 percent, but private individuals would have to pay extra 1.5 percent.
In addition, some state officials have been speaking about their intentions to make Ukraine a crypto-friendly country in the same league as Malta or Switzerland.
Meanwhile, as there is no legal definition of crypto in Ukraine, those retail outlets which announce they’re accepting crypto don’t formally violate any law.
What are bitcoin and cryptocurrency taxes like in your jurisdiction? Do you find them reasonable? Let’s hear your thoughts in the comments.
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