In an announcement report made on Tuesday by the UNIAN local news agency, the bill comes from Ukraine’s Digital Transformation Ministry, which is an inter-factional parliamentary association for the Blockchain4Ukraine and a Better Regulation Delivery Office (BRDO) organization. It seems 13 Parliament members have authored the bill, in an attempt to introduce the most important concepts on crypto-assets to Ukraine’s Taxation Code.
The Bill Has a Definition for Crypto Assets
In the bill, crypto assets are defined as a “special type of valuable property in the digital form, created, accounted for and disposed of electronically,” and can be tokens, cryptocurrencies or other types of assets the draft refers to. The ministry said it’s confident the new law will layout the ideal conditions for virtual assets to comply with Ukraine’s legislation, considering the interest and engagement of many entities in the world of virtual trading. It’s expected for the transactions to bring additional tax revenue.
How Will the Tax on Crypto Earnings Be Calculated?
In case the Parliament adopts the bill, earnings made from trading virtual assets are going to be considered the difference between the price of purchase and what has been received after the sale. The gains will be declared as “other” when it comes to the type of income, whereas it’s likely for losses to not be balanced enough to reduce the total of the before-taxes result.
Crypto Users to Be Taxed 5% for the First 5 Years
The crypto earnings would be taxed standardly, at the Ukraine’s 18% rate, but the good news is that an initial 5% rate on personal crypto income is intended to be applied for 5 years after the bill gets approved. Besides, crypto assets would not have value-added tax (VAT) liability. In other words, the tax laws would apply differently to tokenized assets, as these are defined to certify ownership and not as property rights, which means tokens would be taxed just like the services and goods that are behind them.
Crypto Exchange Founder Had Something to Say About the Law
The founder of Ukrainian’s crypto exchange Kuna and the Blockchain Association of Ukraine’s President Michael Chobanian said he thinks the law can work, but that the crypto industry is facing other hurdles that need to be addressed at the moment.
“If the National Bank of Ukraine doesn’t allow banks to open accounts for crypto businesses in Ukraine nothing for the industry will really change,” he added.
In a recent announcement, the ministry said it’s partnering up with crypto exchange Binance to develop cryptocurrency regulations for the country. However, it’s not yet clear if Binance was involved in the issuing of this new bill, as it hasn’t made any comment.