In the encryption currency when trading with legal tender, businesses and individuals will be required to pay transaction and mining profits tax of 5%.
Ukrainian parliamentarians and industry representatives drafted a draft law aimed at imposing a low tax rate on Ukrainian encryption revenue. When cryptocurrency is traded with fiat currency, businesses and individuals will be required to pay for the transaction and levy a 5% tax on profits. In addition, since the beginning of the eastern conflict, all Ukrainians have to pay 1.5% of mandatory “military expenditures”.
Ukraine People need to pay 5% tax on cryptocurrency and 1.5% military expenses
Despite the growing popularity of cryptocurrencies, it has not yet obtained legal status and is regulated in Ukraine. The cryptocurrency industry in Ukraine has developed rapidly. It is hoped that the authorities will issue regulatory policies as soon as possible. However, officials in Kiev are slow to respond to this phenomenon and have issued corresponding policies. Since October last year, the Ukrainian Central Parliament (Rada) has suspended three bills, and the fourth is expected to be submitted in September this year.
Ukraine passed a regulatory opinion last month, and the government is planning to adopt regulatory measures on cryptocurrencies. A new draft law involving taxation is currently being proposed. Lawmakers led by Ukrainian legislator Oleksiy Mushak and more than 20 representatives in the field of cryptocurrency are studying the bill, which proposes a temporary tax system in the field of cryptocurrency. Legislators hope that the bill will be implemented in 2019 and will continue to be in force until 2025.
According to Liga Business, the draft is intended to impose a 5% tax rate on cryptocurrency transactions and mining profits. The tax will be levied based on the difference in the price of the sale and purchase of the digital assets and the difference between the mining revenue and expenses. Taxes will only be levied if cryptocurrency funds are exchanged for fiat money or used to pay for goods and services, including property. Currency transactions are not taxed.
According to Mushak, the encryption industry is positive about the recommendations in the legal documents. Artiom Afyan, managing partner of Juscutum, said:
“The government should not intervene in currency transactions, but should supervise the export of legal currency, the physical sector, and the purchase of goods. The 5% tax rate sounds reasonable. In fact, this is the price paid for the legalization of cryptocurrency transactions.”
In addition, Ukrainians who profit from cryptocurrencies are expected to pay the so-called “military expenses” – individuals will pay 1.5% of their income. In August 2014, in order to finance the reform of the Ukrainian armed forces, the tax was levied as a temporary measure. Since the spring of the same year, Ukrainian troops have been in military clashes with pro-Russian forces in the eastern part of the country.
Regulatory and regulatory agencies
According to the new draft, the cryptocurrency market will be regulated by the National Securities and Stock Market Commission (NSSMC). Recently, the regulatory concept developed by the agency was supported by the Financial Stability Council of Ukraine. The institution is owned by the National Securities and Stock Market Commission, the National Bank of Ukraine, the Ministry of Finance, the Deposit Guarantee Fund, and the National Financial Services Market Commission. Representative composition.
The National Securities and Stock Market Commission released details of the new regulatory opinions in July. It defines cryptocurrency as “tokens as a means of exchange and value storage” and divides the token into secure, encrypted “centralized or decentralized account units”. It is expected that the committee will also be responsible for authorizing and supervising cryptocurrency exchanges and ICOs. The Ministry of Finance and the state finance department should implement a taxation system.
According to Konstantin Yarmolenko, adviser to the Ukrainian’s Electronic Government Agency, the rule is designed to protect investors, not to regulate itself. Alexander Momot, chief executive of Ukraine’s cryptocurrency startup Remme, believes that in order to stimulate the development of the country’s encryption industry, loose regulatory and tax-free policies should be introduced instead of taxation and regulatory systems.
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