Ukraine is now one step closer to formulating crypto taxation laws after a draft bill was submitted to the country’s parliament seeking to establish a 5% crypto tax. The bill was authored by the country’s Digital Transformation Ministry and seeks to finally allow the country to implement taxation to an industry that is becoming increasingly crucial to is economy.
The bill was drafted by 13 members of the Verkhovna Rada, Ukraine’s parliament. The 13 are members of the Digital Transformation Ministry, a parliamentary association for the Better Regulation Delivery Office and the Blockchain4Ukraine associations.
The bill first defined cryptos as a special type of valuable property in the digital form, created, accounted for and disposed of electronically. They can be cryptocurrencies, security tokens, utility tokens and more.
While the standard taxation rate in Ukraine stands at 18%, crypto holders will be spared, at least for the first five years after the bill comes to effect. The bill proposes that for the first five years, cryptos should be taxed at 5%. Additionally, cryptos will not be subjected to value added tax.
The bill further proposes that earnings made from trading cryptos to be calculated as the difference between the purchase price and the selling price. On the tax returns, the earnings from crypto will be filed under ‘others’.
The bill was drafted just days after it emerged that a new law in Ukraine will require the citizens to disclose their crypto holdings, as well as their families’. The new law, which is set to come into effect January 2020, seeks to curb the use of cryptos in money laundering and the financing of terrorist activities. Interestingly, this law recognizes cryptos as a store of wealth.
While the tax laws are welcome by the Ukrainian crypto industry, it’s still not enough if other changes aren’t made. This is according to Michael Chobanian, the founder of Ukrainian crypto exchange Kuna and the president of the Blockchain Association of Ukraine. Speaking to Bitcoin Exchange Guide, he stated that the crypto industry has some other challenges which are more urgent.
He added, “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.”
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