Ukraine, Cryptocurrency income tax 23% taxation promotion… Only applicable to cash transactions

Ukraine has introduced new taxation measures for cryptocurrency transactions, actively stepping into regulatory reorganization. The National Securities and Stock Market Commission (NSSMC) of Ukraine, in a tax framework announced on April 8 (local time), proposed imposing up to 23% tax on converting cryptocurrency to cash or exchanging it for goods and services.

According to the plan, a general income tax of 18% plus an additional 5% for military fund purposes will be applied. However, transactions between cryptocurrencies are excluded from taxation, following a regulatory approach similar to Austria, France, and Singapore. The NSSMC is also considering applying a tax exemption or a low tax rate of 5-9% for stablecoins, considering their foreign exchange-like nature.

Ruslan Magomedov, chairman of the NSSMC, explained, "Cryptocurrency taxation is no longer a theory but is soon to become a real issue," adding that this framework is intended to help legislators carefully assess its market impact and details.

This proposal also includes taxation standards for various cryptocurrency activities such as mining, staking, hard forks, and airdrops, beyond simple transactions. The NSSMC stated that mining is generally regarded as business income, but tax-exempt limits can be set based on certain conditions. Staking may only be classified as taxable when the cryptocurrency is liquidated, and hard forks and airdrops are proposed to be taxed as ordinary income or at the time the asset is liquidated.

It also includes setting tax-exempt criteria to protect small investors. While tax exemptions for donations, family cryptocurrency transfers, and long-term holders are being considered, such benefits may not apply to non-custodial wallets where individuals store assets themselves, the NSSMC noted.

Meanwhile, the Ukrainian parliament continues to push for cryptocurrency-related legislation. In December of last year, Tax Committee Chairman Danyl Hetmancev mentioned that a draft bill for cryptocurrency legalization was under review, and the final bill could be prepared within this year. This movement is based on regulatory framework legislation signed by President Volodymyr Zelensky in 2022.