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Ukraine is looking to pass a bill that would tax both cryptocurrency operations and assets, according to a draft version of the laws shared by the country’s parliament, the Verkhovna Rada.
A 5% tax on individuals and legal entities is proposed on operations utilizing cryptocurrencies and tokens, with businesses that claim crypto-related profits suggested to pay 18% tax on this total amount. This 18% is the standard corporate and business tax rate in the Eastern European nation.
The proposed legislation is the result of a 23-member strong parliamentary team who are looking to implement the changes to the tax plan gradually between 2019 and by January 2024. The motivation for these individuals lies in a desire to create more state revenue and promote cryptocurrency activities by offering a legally compliant, regulated environment.
A figure of UAH 1.27 billion (approximately USD43 million) is cited by the politicians as the potential amount of state budget revenue that could be collected annually between 2019 and 2024 if the bill is approved by the parliament.
Right now, cryptocurrency operations are not technically controlled by the government, meaning that many are concerned about the legal implications of entering the market and are therefore choosing not to do so, and also that crypto-related businesses are technically working in an unsustainable grey zone, dissuading them from expansion and potentially innovation.
In September last year, the Ukrainian Cabinet of Ministers on the Financial Stability Board held a discussion to determine the legal status of all virtual currencies, overseen by the Verkhovna Rada. The outcome of this was, however, unsatisfactorily clear, and has led to crypto mining operations being raided and shut down, with secret service agents even allegedly stealing profits from the miners in several cases.
With Ukraine still subject to occupation from separatist groups in the regions of Donetsk and Lugansk, the government claims that one of the largest mining raids was connected to Russian banks that were financing the occupation. The Kvazar semiconductor plant in Kiev was raided last year, with over USD 4 million of mining equipment taken, including 1,000 graphics cards and 1,500 hard disks.
Regulating and taxing the cryptocurrency space in Ukraine could well prove to be the solution for solving the troubled climate that seems to be partly a result of the autonomous nature of the space.
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