Ukraine is making significant strides in regulating cryptocurrency taxation, with the National Securities and Stock Market Commission (NSSMC) unveiling a comprehensive taxation framework for virtual assets.
This move aims to align Ukraine’s financial system with global standards for digital assets, marking a critical step towards formalizing cryptocurrency regulations in the country.
The proposed tax structure introduces both standard and preferential models, signaling the government’s intent to integrate its tax system with global best practices. Publicly shared by NSSMC head Ruslan Magomedov on Telegram, the proposal includes an 18% personal income tax rate on virtual asset gains, along with a 5% military levy. The military levy, a wartime initiative, is intended to support Ukraine’s ongoing defense efforts.
In addition to the standard tax rates, the proposal also outlines preferential tax models of 5% and 9% for specific categories of taxpayers. These preferential rates are designed to align with global tax frameworks while adhering to Ukraine’s legal structure, providing flexibility in taxation for different crypto activities.
Under the proposed regulations, taxable income would be defined as either gross revenue or net income after expenses. Taxable events would occur when virtual assets are either received or exchanged for fiat currency or non-virtual goods and services. However, transactions that involve only virtual assets, without conversion to fiat or goods, would not trigger tax under this model.
The NSSMC’s taxation matrix also draws comparisons with countries that offer more favorable treatment for crypto activities. For example, Austria and France do not tax crypto-to-crypto exchanges, while Singapore exempts individuals and companies from capital gains taxes. Malaysia only taxes routine or business-related crypto transactions, and Georgia provides full exemptions for individuals on income and capital gains derived from digital assets.
While Ukraine moves toward legalizing its cryptocurrency market, officials are reportedly considering a tax rate of up to 18% on crypto earnings. Although Ukraine’s crypto community advocates for a 5% tax on income, the government is currently leaning toward the standard 18% personal income tax plus a 5% military levy. Additionally, individuals unable to verify their initial investments may face a higher 23% tax on their total holdings.
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