Crypto taxes loom for Ukraine
MP Yaroslaw Zhelesnyak, also the Deputy Chairman of the Financial Committee,breaks down a potential financial future on his Telegram channel:
"The National Commission for Securities and Stock Market (NCSSM) and the NBU are pairing up with the IMF to draft a law that could legalize cryptocurrency. They aim to make it official by the end of December," he notes.
Looking beyond that, "other anticipated changes for the post-war period include a revamp of the taxation for industrial emissions and a broader assessment of the taxation for extractive industries," Zhelesnyak adds.
It's essential to understand that different countries categorize and tax cryptocurrencies differently. In the USA and Australia, for instance, cryptocurrency owners must pay capital gains tax. In Germany, it's considered a unique asset type with specific tax rates. Portugal, on the other hand, taxes cryptocurrency income based on its categorization – passive investments carry a 28% rate, while self-employment income faces progressive rates ranging from 14.5% to 53%.
In the proposed Ukrainian cryptocurrency tax plan, most individual earners might face an 18% personal income tax on crypto earnings, with an additional 5% military levy for a potential total of 23%. Yet, privileged taxpayers or transactions could benefit from lower rates of 5% and 9%.
The draft law only taxes cryptocurrencies when converted to fiat currency or used for goods and services. Crypto-to-crypto transactions remain untaxed, mirroring practices in many European countries and crypto-friendly jurisdictions. Furthermore, stablecoins might be exempt from taxation or subject to lower rates – especially those backed by foreign currencies, thanks to Ukraine's existing tax code exemptions for foreign exchange transactions.
While the proposed crypto tax framework doesn't address industrial emissions or extractive industries directly, Ukraine's broader economic reforms aim to synchronize the country's financial systems with international norms. This could potentially lead to future policies spanning various sectors, including environmental and industrial taxes. However, the main focus remains on shaping and regulating the cryptocurrency market.
Ukraine's proposed crypto taxation is part of its wider digital asset adoption strategy and regulatory formalization, which has the potential to impact other countries' crypto policies too. In contrast, any reforms regarding industrial emissions and extractive industries are likely to be part of broader environmental and economic policies rather than cryptocurrency regulations explicitly.
- The IMF, in partnership with the National Commission for Securities and Stock Market (NCSSM) and the NBU, are working on a law to legalize cryptocurrency in Ukraine, aiming for an official announcement by the end of December.
- In Portugal, cryptocurrency income is taxed based on its categorization, with passive investments being taxed at 28% and self-employment income subject to progressive rates.
- Under the proposed Ukrainian cryptocurrency tax plan, most individual earners might face an 18% personal income tax on crypto earnings, with an additional 5% military levy, totalling 23%. However, select taxpayers or transactions could benefit from lower rates of 5% and 9%.
- While the proposed crypto tax framework does not directly address industrial emissions or extractive industries, Ukraine's broader economic reforms aim to synchronize the country's financial systems with international norms, potentially leading to future policies that span various sectors, including environmental and industrial taxes.
