Ukrainians to Pay 19.5% Income Tax on Their Profit From Cryptocurrency

Crypto market in Ukraine remains unregulated, however, the government wants to impose taxes on this area anyway. According to an official from the Finance Ministry, a regular income tax is expected to be imposed on any digital currency activity, such as mining or trading.

“Two types of operations are possible with cryptocurrency – mining and trading. So, let’s say we bought bitcoin for 1,000 hryvnias; then we were lucky and it went up to 2,000 hryvnias; then we left bitcoin and credited the funds to a bank card. The change is 1,000 hryvnias. We impose income tax on it,” Sergey Verlanov,  Ukraine’s deputy-finance minister, commented on the subject. “The rate is 19.5% – whether this is a lot or a little, is a rhetorical question.”

The Question of Taxation

Despite the fact that the crypto sector is rapidly developing in Ukraine, there is still no virtual coin regulation implemented. The Rada has accepted three bills since last October in order to put some guidelines on crypto trading. In September Ukraine will see a fourth draft dedicated to crypto taxation. The law suggests introducing a temporary tax system until 2025, with the profit tax of 5%.

Verlanov thinks that the crypto-coin field is a good way for the country to get additional revenue, even though it is not yet regulated. But at the same time, he understands that Ukraine needs to make the cryptocurrency market legal by adding some regulations. The moment it becomes real, a crypto exchange has to take the role of a tax agent as well.

Two Ways

Now investors can declare their digital currency income both as property or a financial asset, the government representative reports. It is possible to be interpreted in two ways due to the legitimacy issue.

“We already have deputies who have submitted electronic declarations and reported their crypto assets. Some declared them in the ‘property’ section, others in the ‘financial assets’ section. Both interpretations can be used since cryptocurrency does not have a legal status yet,” Verlanov explained.