In a move to regulate the growing cryptocurrency market and capitalize on its potential, the government of Ukraine has announced its intention to tax crypto profits starting in 2024. Under the proposed plan, individuals and businesses involved in crypto transactions will be required to pay an 18% tax on their profits. This decision reflects Ukraine’s efforts to adapt to the changing landscape of finance and ensure the country benefits from the increasing popularity of digital assets.
Regulatory Plans and Proposed Tax Rates
Ukrainian authorities are ready to implement a tax of 18% on cryptocurrency gains starting in 2024 after sharing that Ukraine wants to tax crypto profits pending approval by lawmakers later this year.
According to Forbes Ukraine, the draft law will be presented to parliament during the next session by the National Commission for Securities and the Stock Market. The regulatory body’s proposals outline the establishment of a uniform tax rate on profits derived from cryptocurrency investments. However, military personnel will be subject to a reduced tax rate of 1.5%.
Yuriy Boyko, a member of the commission, stated: “We hope that the law will be adopted in September, and will come into force in 2024.”
Expansion of Regulatory Authority and Operating Permits for Crypto Exchanges
In addition to the proposed taxation framework, the commission is also advocating for enhanced regulatory powers for both itself and the central bank in the cryptocurrency sector.
Under the draft law, all crypto exchanges and brokerages operating in Ukraine will be required to obtain operating permits issued by the commission.
Ukraine has been actively working towards aligning its crypto regulations with those of the European Union (EU) in recent times. The country aims to introduce regulations that are in line with the EU’s Markets in Crypto-Assets (MiCA) legislation, reflecting its commitment to harmonizing standards with international best practices.
Boyko commented on these regulatory developments, stating: “The [draft law] makes it possible to work according to EU rules. If an exchange or a [crypto trader] wants to operate in the market, they must comply with these rules.”
Mixed Reactions from the Crypto Community towards Ukraine’s 18% Tax Proposals?
The announcement sparked diverse opinions within Ukraine’s crypto community, reflecting a range of perspectives. Mykhailo Chobanyan, the founder of the Kuna crypto exchange, expressed caution and advised against hasty actions. He emphasized the importance of thoroughly understanding the reasons, methods, and timing behind implementing regulations before enacting them into law. Chobanyan emphasized the need for a comprehensive assessment before moving forward with any regulatory measures.
A legal expert quoted by Forklog, a media outlet, expressed concerns over the proposed 18% tax rate, suggesting that it could discourage investors and potentially lead to an exodus of users and crypto companies from Ukraine. The expert emphasized the need for a careful assessment of the tax rate’s impact before implementation.
The central bank has voiced its perspective, advocating for regulations that strike a balance between consumer protection and financial stability. The bank highlighted the importance of considering the unique characteristics of Ukraine’s legal and financial system when formulating regulations.
In response to perceived increased instances of “crypto-powered corruption,” Kyiv has pledged to take action to combat this issue, signaling its commitment to addressing potential illicit activities involving cryptocurrencies.
In conclusion, Ukraine wants to tax crypto profits at 18% from 2024 marks a significant step towards regulating the burgeoning cryptocurrency market. While the announcement has elicited mixed reactions from the crypto community, with concerns about investor deterrence and the potential outflow of users and companies, it also reflects the country’s efforts to align with international standards and promote transparency.
The proposed tax framework, coupled with enhanced regulatory powers for the commission and central bank, aims to create a fair and stable environment for crypto activities while safeguarding consumer interests and combating illicit practices. The coming months will determine how Ukraine navigates the path toward implementing these regulations effectively.