- The NSSMC has formulated how to tax crypto transactions in Ukraine.
- Stablecoins and crypto-to-crypto transactions will not be taxed in Ukraine.
- The proposed tax regime is to create guidelines for growing the crypto market.
Ukraine’s National Securities and Stock Market Commission (NSSMC) has proposed taxing cryptocurrency transactions nationwide. Key details from the NSSMC’s submitted framework outline an 18% income tax and a 5% military levy.
Which Transactions Trigger the Levy?
The Commission highlighted that the tax would apply when users convert cryptocurrency to fiat or use it to purchase goods and services. Since legalizing crypto in 2022, Ukraine’s government aims for this framework to provide clear guidelines supporting regional crypto market growth.
According to NSSMC Chair Ruslan Magomedov, crypto taxes are a “fast approaching reality,” not merely a hypothesis, he stated. He views the crypto tax regime as an urgent issue requiring immediate attention.
Why Exempt Trading and Stablecoins?
Despite the chair’s firm stance, the commission’s proposed framework exempts crypto-to-crypto transactions from taxation. This approach aligns with systems in several European countries, including France and Austria, and other crypto-friendly jurisdictions like Singapore.
Additionally, NSSMC exempts stablecoins backed by foreign currencies from being taxed. However, the proposed tax rules could apply an alternative approach with a reduced rate of 5% or 9% on stablecoins, considering Ukraine’s tax code already excludes income from transactions in “foreign exchange values.”
Analysts believe these exemptions could boost Ukraine’s attractiveness for certain crypto activities. The assumption is the NSSMC aims to balance regional industry growth with ensuring proper taxation.
Other details in the proposed framework cover crypto-related activities like mining, which the Commission could treat as a business activity. However, it is crucial to note that the proposal mentioned the possibility of a tax-free limit for small-scale miners.
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