Recently the deputies received a new bill draft that contains future taxes for cryptocurrencies in Ukraine. In particular, the virtual asset profit tax for individuals will be only 5% + 1.5% of the standard military duty and just 5% for legal entities.
According to the explanatory note to the bill published by the president of the Ukrainian Blockchain Association (UBA) and founder of the Kuna cryptocurrency exchange, Michael Chobanian, such a “privileged” taxation regime will work during the first five years.
What taxes for cryptocurrencies will be in Ukraine after the bill is voted?
The draft called “On the changes to the Tax Code of Ukraine regarding the virtual asset turnover taxation in Ukraine” contains several measures to support the development of the virtual asset market, including:
- VAT-free transactions with virtual assets and services of the virtual asset service providers;
- Low-tax regime (for 5 years) for the investment profit from the virtual asset transactions and services of the virtual asset service providers — only 5% of profit tax;
- Low-tax regime (for 5 years) for the investment profit from the virtual asset transactions for individuals — only 5% of income tax;
- Individuals shall pay 1.5% of the military duty from the investment income of the virtual asset transactions.
The bill also determines:
- The procedure for determining the object of taxation, declaration of relevant income/profits and the procedure for payment of prescribed taxes;The procedure for determining the object of taxation, declaration of relevant income/profits and the procedure for payment of taxes;
- What taxes will be for transactions with secured and unsecured virtual assets;
- And basic requirements to the accounting and bookkeeping of virtual asset transactions.
Why it’s important
First, according to this bill, you shall pay tax only from your profit. Until you keep your cryptocurrencies in the exchange accounts, you will pay no tax.
Second, as recently AIN.UA informed, on September 8, 2021, the Ukrainian Parliament has voted for draft no. 3637 of the Virtual Assets Bill. It regulates the industry of cryptocurrencies, and now holders of such assets will legally exchange and declare them, and international crypto companies may register a blockchain business in Ukraine.
However, according to transitional provisions, bill No. 3637 will take effect only together with another Bill “On the changes to the Tax Code of Ukraine regarding the virtual asset turnover taxation in Ukraine.” Because if the virtual assets will be taxed according to the current legislation, the whole industry would go into shadow, and specialists would emigrate from Ukraine to the countries with more attractive taxation regimes.
To avoid such a situation and legalize the cryptocurrency market in Ukraine, the bill prescribes a “light” taxation regime for the first five years.
