October 20, 2020

Ukraine is ready for taxation of cryptocurrencies

Ukraine is ready for taxation of cryptocurrencies

Experts, with the support of the Ministry of Finance, BRDO and the Blockchain4Ukraine group, have prepared draft laws on taxation of the crypto industry, which was almost immediately criticized by local businesses.

The developed draft tax and AML laws necessary for the legalization of cryptocurrencies in the country will be submitted to the Verkhovna Rada in the coming weeks.

Bills define the concept of “virtualan asset ”as property, and“ cryptoactive ”as its subtype, developed using blockchain technology. Tokens are allocated to a separate group - they are classified as an asset with additional rights from the owners.

The document determines the taxation procedure for cryptocurrency transactions. Such operations are exempt from VAT, and income tax remains general - 18%.

The bill also spells out the rulesservicing crypto accounts in banks in the context of combating money laundering and Ukraine's compliance with AML requirements and the latest FATF recommendations. MPs promise to launch a “new era of blockchain economy in Ukraine” before the new year.

However, Ukrainian crypto business players are surethat the country may lose not only billions of hryvnias, but also blockchain specialists due to the proposed tax law. Now Ukrainian startups are developing at the expense of foreign capital, which is successfully pouring into the country's economy, and specialists are increasingly receiving offers to move to cryptocurrency-friendly jurisdictions and pay less taxes.

According to entrepreneurs, taxation will scare off foreign investors and force developers, businessmen and investors to look for more favorable working conditions in other countries.