According to Cointelegraph, Ukraine's National Securities and Stock Market Commission (NSSMC) has introduced a proposal to tax certain cryptocurrency transactions as personal income, with rates reaching up to 23%. This proposal, unveiled on April 8, excludes crypto-to-crypto transactions and stablecoins from taxation. The framework suggests an 18% tax on crypto transactions, supplemented by a 5% military levy. NSSMC Chairman Ruslan Magomedov emphasized the urgency of addressing crypto taxes, stating that it is a pressing reality. The framework aims to assist lawmakers in making informed decisions by evaluating the pros and cons of each suggestion, as these factors could significantly impact the market and tax obligations.
The proposed framework specifies that taxes will be levied when cryptocurrencies are converted into fiat currency or exchanged for goods and services. By excluding crypto-to-crypto transactions from taxation, Ukraine aligns itself with several European nations, such as Austria and France, and crypto-friendly regions like Singapore. The NSSMC also noted that it is logical to exclude stablecoins backed by foreign currencies from taxation or to apply a reduced tax rate of 5% or 9%, given that Ukraine's tax code already exempts income from transactions involving foreign exchange values. The report suggests that stablecoins backed by foreign currencies could be exempt from taxation.
The framework also addresses other crypto-related activities, including mining, staking, hard forks, and airdrops, proposing various taxation options. While crypto mining is generally viewed as a business activity, the framework suggests a potential tax-free limit for specific crypto transactions, including mining. Staking might be classified as "business captive income" or taxed only when converted to fiat currencies. Hard forks and airdrops could be taxed as ordinary income or upon cashing out the tokens. The NSSMC proposes a tax-free threshold to alleviate the burden on small investors, a practice common in other jurisdictions. Exemptions for donations, transfers between family members, and long-term crypto holders are also considered, though non-custodial crypto wallets might not qualify for these exemptions.
In December, Daniil Getmantsev, head of Ukraine's parliamentary tax committee, mentioned that a draft bill to legalize cryptocurrencies was under review and anticipated to be finalized early this year. Ukrainian President Volodymyr Zelenskyy had previously signed a law in March 2022, establishing a legal framework for a regulated crypto market in the country.
