Due to the lack of specific crypto regulations, Ukrainians are asked to pay a regular 19.5% tax on all of their crypto earnings. This includes the revenue generated by mining and trading, and investors can report their earnings as financial assets, or even property.
How to tax crypto income?
A lot of countries around the world are currently struggling with the issue of crypto taxation. As the crypto markets of various countries are developing, their governments are looking into different methods of generating more profits themselves. However, it is difficult to do so without the proper regulations for the crypto space. Some of them cannot even find a way to legalize these digital assets.
Ukraine, while being one such country, still wishes to introduce crypto taxes. In fact, Sergei Verlanov, the country’s deputy finance minister, even believes that the taxation issues are greatly exaggerated.
According to him, there are two operations that can be done with cryptos — trading and mining. He believes that the issue doesn’t have to be more complex than simply implementing a regular 19.5% income tax. He admitted to cryptos being a common item in Ukraine, despite their lack of legal status. According to existing laws, they are intangible property. To him, there is no difference in trading BTC and buying and selling tanks in a video game.
Still, he believes that the country needs to determine the legality of cryptos, and after that, crypto exchanges can become tax agents.
No answer without regulations?
The representatives of the Ukrainian government stated that the taxpayers have two options at the moment. They can either report their crypto earnings as financial assets or as property. Since cryptos still don’t have a legal status, it makes no difference as to how digital currencies are reported, at least for the time being. Still, Verlanov continues to point out that without the legal status, it is not possible to properly tax and control the transactions.
A lot of crypto aspects are completely unregulated in Ukraine due to the lack of dedicated legislation. Simultaneously, the popularity of cryptos continues to grow. Even though Ukraine had three bills filed last October, the fourth draft that covers taxation is only expected to arrive this month. The authors propose that a temporary tax is introduced which will require crypto users to pay 5% on profits made from mining and trading.
Additionally, around a month ago, Ukraine’s Financial Stability Council approved a new regulatory concept that includes the crypto space. The body would include representatives of different organizations, including the country’s national bank, finance ministry, the National Securities and Stock Market Commission, the Deposit Guarantee Fund, and finally — the National Financial Services Market Commission.