Ukraine To Collect Personal Income Tax On Cryptocurrency

The Financial Committee of the Ukrainian government has published a draft law that suggests changing the regulation of money transfers, including cryptocurrencies.

According to a report by local news media, the draft of law No. 5361 significantly changes the approach to the questions of digital currency issuing and circulation, in particular, it proposes allowing the release of digital money not only to banks, but also to other financial institutions that have licenses.

The head of the tax and customs practice of ‘Vdovichen & Partners company’, Maria Zolotareva, suggests that the adoption of this law will increase the turnover on the electronic wallets of Ukrainians. She stated that it will allow individuals to pay taxes, fees and make charitable contributions.

She further noted that in 2016 the National Bank of Ukraine counted about 40 million e-wallets with annual turnover of about 3 billion UAH ($113 million USD). The new law should increase the control over digital money circulation and this means that there are risks of additional personal income tax on cryptocurrencies. 

However, Maria Zolotareva pointed out that digital currency is a means of payment that can be used, or may not be used by an individual. Thus, if there are no transfers in fiat they should not be considered an income. In her opinion, the legislators should recognize digital currency as securities first in order to be able to calculate a person's income. But so far the position of the tax authorities has not changed.