Ukrainian Parliament Bill to Introduce Crypto Profit Taxing

By Daniel Zo Ukraine, Cryptocurrency, Tax

Despite the fluctuating crypto price drops present during the last few months, governments are still interested in regulating and profiting off the digital currency revolution.

With this in mind, recent reports indicate that the Ukrainian Parliament is interested in imposing a tax on digital currency-related profits of its citizens. To put things better into perspective, the country’s legislative body has proposed a bill that would impose a 5% tax on all crypto profits attained by both commercial entities and individuals.

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However, the bill does complicate the market a bit, since it doesn’t only regulate the tax. Rather, it states that individuals and companies should report cryptocurrency profits and other forms of income separately.

Speaking of commercial entities, if the bill ends up passing, they’ll have to pay the 5% tax until the 1st of January 2024. From that point onwards, the tax percentage will increase to 18% of profits.

The bill backs its taxing decision on the popularity of Initial Coin Offering outweighing Initial Public Offerings. Therefore, the bill mentions: "Given the current state of affairs, Ukrainians are deprived of the opportunity to raise funds and resources to develop their ideas and technologies through traditional instruments. So, last year, Ukrainian companies did not get a single dollar through an IPO mechanism. At the same time, according to the Ukrainian association UVCA and Deloitte in 2017, 19 Ukrainian start-ups attracted $ 160 million or more than UAH (Ukrainian hryvnia) 4.3 billion through ICOs.”

Apart from regulating tax, the bill wishes to add an official definition for cryptocurrencies and virtual assets – “a virtual asset in a form of a token, which functions as a mean of exchange or a store of value", and "form of a digital record on the distributed ledger that can be used as a mean of exchange, unit of account or a mean of storing value", respectively.

It is important to point out the fact that the bill in question discusses crypto mining as well. Based on this, it states that Ukraine was an early-leader of the mining industry, granted that it once held 30% of worldwide mining power by hosting GHash, one of the biggest bitcoin mining pools. In 2014, Ukraine ended up holding up roughly 55% of global mining power, a massive number allowing the operating entities to schedule a 51% attack.

Luckily, this did not happen, yet later on, mining pools left the country due to regulatory uncertainty.

Based on these aspects, what are your thoughts on the crypto-related events taking place in Ukraine? Let us know in the comment section.