Ukraine is planning to introduce a tax on profits from cryptocurrency trading when the gains are withdrawn in fiat money or when cryptos are used in payment for goods and services, according to a report from local news outlet Liga.Biznes.
The proposal is included in a draft bill to be submitted before the Rada (Ukraine’s parliament). The tax will amount to 5%, and there will be an additional 1.5% for the temporary military charge. The latter was introduced in 2014 to finance the army reform and is collected from all physical residents and non-residents collecting income in Ukraine.
The draft bill will be brought up for deliberation in the Rada by MP Oleksiy Mushak and several of his colleagues in September. Mushak prepared the bill in cooperation with 20 representatives of Ukraine’s thriving crypto industry, which has been calling for regulations for a while now. The MP stated before Liga.Biznes that the industry is receiving his proposals well.
If passed, the bill and the taxes will be introduced in 2019 and remain in effect until 2025, according to Mushak. The tax will be levied only on fiat withdrawals and crypto payments for goods and services. Crypto-to-crypto operations will not be taxed.
“The state should not touch crypto-to-crypto transactions. But income in fiat or in the real sector (purchase of goods) should be taxed. Five percent looks optimal. This is the price for legalizing income from crypto operations,” Artem Afyan, managing partner in law firm Juscutum, told Liga.Biznes.
According to the draft bill, the crypto market will be regulated by the National Securities and Stock Market Commission, which has itself been preparing a concept for regulation of the crypto markets and initial coin offerings (ICOs). However, the document is not public yet.
Ukraine has been planning for some time to regulate its crypto industry. Earlier this year, the government announced it was forming a working group to develop regulation and taxation rules.