Ukraine Considers Up to 23% Personal Income Tax on Crypto in Newly Proposed Tax Scheme

Ukraine’s prime monetary regulator is floating the concept of taxing cryptocurrency as private revenue, with attainable carveouts for sure overseas asset-backed stablecoins, below a newly proposed taxation matrix revealed on Tuesday.

In a translated letter introducing the potential new strategy, Ruslan Magomedov, head of Ukraine’s National Securities and Stock Market Commission, mentioned that efficient tax coverage is a needed step in stopping monetary abuse and facilitating the “legal and responsible use of digital assets.”

“Establishing fair and understandable taxation rules is also a prerequisite for attracting investment and integrating the Ukrainian virtual asset market into the global financial market,” Magomedov added.

Under the NSSMC’s prompt tax scheme, sure crypto transactions — basically these in which non-stablecoin cryptocurrencies are cashed out for fiat forex or exchanged for items or companies, and through which there have been no monetary losses from the transaction — could be taxed at Ukraine’s normal private revenue tax charge of 18%, plus the extra 5% wartime levy that went into impact final December.

Crypto-to-crypto transactions wouldn’t be topic to taxation below the proposed tax matrix, which is in line with how a number of different European international locations together with Austria and France, in addition to crypto-friendly jurisdictions like Singapore, deal with crypto taxation.

Because Ukraine’s tax code exempts any revenue generated from transactions with overseas alternate values from being taxed, the NSSMC prompt “it makes sense to consider a preferential rate or exemption from taxation” for overseas asset-backed stablecoins and sure asset-referenced tokens (ARTs). The prompt preferential tax charge below the matrix might be both 5% or 9%.

The matrix additionally supplied quite a lot of taxation choices for different varieties of crypto transactions, together with mining, which the NSSMC prompt might be thought-about a “business activity”; staking, which the regulator mentioned may both be “considered as business captive income” or taxed solely on the cash-out stage; in addition to hard-forks and airdrops, which the regulator mentioned may both be taxed as extraordinary revenue or solely on the cash-out stage.

Ukraine had beforehand launched a draft legislation equally amending the nation’s tax code to cowl cryptocurrency in 2023. A 2024 evaluation from Swiss blockchain analytics agency Global Ledger discovered that Ukraine may stand to acquire over $200 million in annual taxes from crypto transactions.

Ukrainian President Volodymyr Zelensky formally legalized the nation’s cryptocurrency sector in 2022, figuring out the trade’s regulators and giving them the go-ahead to create particular rules. The National Bank of Ukraine is at the moment working on a draft legislation based mostly on the European Union’s (EU) Markets in Crypto Assets (MiCA) regulation.

Ukraine has been a candidate for EU membership since 2022.

CoinDesk reached out to the NSSMC for a remark.