Ukraine Weighs 5-10% Crypto Tax Rate Amid Ongoing Regulation Debate

Ukraine is edging closer to legitimizing its crypto market, with officials considering a tax rate of 5-10% on crypto income. This proposed tax is expected to contribute to the state budget and military funding. Taras Kozak, a member of Ukraine’s securities regulator advisory group, emphasized the importance of taxing all citizens’ income in a recent interview.

All citizens’ income should be taxed because our state lives on this money, our army fights, we buy weapons, and we maintain security.

Kozak expressed his preference for a lower tax rate of between 5% and 10%. However, not everyone shares the same opinion. Some officials are pushing for standard income taxes, which could be as high as 23%. The Ukrainian government is considering applying an 18% personal income tax, accompanied by a 5% military levy, to crypto income. In cases where investors are unable to provide proof of their initial investments, they might face a 23% tax on their total holdings.

Regulation Timeline Uncertain

A bill to regulate crypto is currently in the works, but the timeline for its implementation remains uncertain. Danylo Hetmantsev, head of Ukraine’s finance committee, anticipates the first reading to take place by late March, followed by a second reading soon after. He predicts that full legalization could occur by summer, whereas Kozak believes it may take until 2026.

Taxation of Crypto Profits

According to Hetmantsev, crypto profits will be taxed similarly to stock investments, making the full capital gain taxable. This approach has led him to dismiss hopes for a lower tax rate. In contrast, many in the Ukrainian crypto space favor a 5% tax on income.

Some key points to consider:

  • Ukraine is moving toward legalizing its crypto market with a proposed 5-10% tax on crypto income.
  • Standard income taxes of up to 23% are also being considered.
  • A bill to regulate crypto is in the works, with the first reading expected by late March.
  • Crypto profits will be taxed similarly to stock investments, making the full capital gain taxable.

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