A 5% tax on transactions with cryptocurrencies could bring Ukraine UAH 1.27 billion annually

Yesterday, bill No. 9083 was sent to the Committee on Tax and Customs Policy for consideration. After a long journey of preparation and discussion, the project regulating the taxation of tokens and cryptocurrencies was finally registered in parliament on September 14.

The author of the bill, People's Deputy Aleksey Mushak with a group of 20 like-minded people, provided in the document a definition at the legislative level of the basic concepts of the crypto industry.
The bill proposes not only the legalization of cryptocurrency in the country, but also provides for taxation of cryptocurrency transactions and defines a transition period from 2019 to 2025. 

According to the document, profit from cryptocurrency transactions is considered similar to profit from the sale of any other goods and services. That is, a positive difference between the income received from the sale of crypto-assets and the confirmed amount of expenses for the acquisition or production (mining) of the corresponding asset. For legal entities, it is proposed for the transition period, until 2025, an income tax rate of 5%. And after its completion, an increase to 18 percent.

For individuals, the tax is set at 5 percent. At the same time, responsibility for the correct calculation of profits and payment of taxes from transactions with crypto assets lies with crypto traders. In addition, individuals must pay a 1.5% military tax when converting cryptocurrency into fiat funds or paying with cryptocurrency for goods and services. 

Taxation will not affect cryptocurrency exchange transactions.

All relevant initiatives are aimed at giving legal status to crypto assets in Ukraine and removing the country’s crypto industry from the shadow sector of the economy.

 The authors of the bill are confident that the legalization of crypto assets and their taxation will bring at least UAH 1.27 billion per year in budget revenues. This figure was calculated based on data on the virtual currency market, currently estimated at UAH 98.7 billion or $3.5 billion. In addition, the authors are convinced that the creation of a regulated space will make it possible to use IPO (initial public offering) and ICO (initial coin offering) to attract resources for the development of innovative technologies.

The law is expected to come into effect as early as January 1, 2019, but no one can guarantee this. In the meantime, cryptocurrency is considered an ordinary negotiable commodity and is taxed at a personal income tax rate of 19.5 percent.