Ukrainian parliament, the Verkhovna Rada, has put forth a bill that would tax crypto asset operators once passed into law.
According to a draft law published on September 14 initiated by 23 government officials, the Ukranian parliament has offered a suggestion of a 5% tax on legal entities (individuals) with digital assets like cryptocurrency tokens. Furthermore, by Jan 1 next year, crypto-related profits from businesses will be subjected to an 18% tax, a basic rate for personal and corporate income tax as per the Ukrainian government.
With the new bill in place, the Verkhovna Rada aims to increase the state budget revenue through taxation on cryptocurrencies in an effort to spur economic growth and development in Ukraine.
The unregulated status of cryptocurrencies
At present, cryptocurrencies are yet to be regulated in Ukraine. The Ukrainian cabinet ministers sitting on the Financial Stability Board, in September 2017, convened to try and determine the most agreeable legal status of cryptocurrencies like Bitcoin (BTC). No conclusion has been reached since. However, the head of Ukraine’s National Securities and Stock Market Commission, Timur Khromaev, openly supported the legalisation of cryptocurrencies in May 2018. According to Khromaev, the Commission will consider taking up cryptocurrencies as a form of financial instrument. He was firm on the need for the government to recognise cryptocurrencies, a sentiment that the Financial Stability Council supported in July.
However, even with these efforts, the government is yet to be convinced on the viability of digital currencies. In fact in June, the State Service for Special Communication and Information Protection of Ukraine made a revelation that the authority was not in any plans to regulate cryptocurrency mining, noting that the uncertainty and volatility of these digital assets, coupled with the unpredictable reactions by authorities makes it unviable at the moment. This has seen several companies leave the country for more crypto-friendly jurisdictions, as per Deloitte:
Given the current state of affairs, Ukrainians are deprived of the opportunity to raise funds and resources to develop their ideas and technologies through traditional instruments. So, last year, Ukrainian companies did not get a single dollar through an IPO (primary public offering) mechanism. At the same time, according to the Ukrainian association UVCA and Deloitte in 2017, 19 Ukrainian start-ups attracted $ 160 million or more than UAH (Ukrainian hryvnia) 4.3 billion through the ICO (the primary token proposal).