Ukraine Proposes 23% Crypto Tax

Ukraine's Proposed Crypto Tax Framework

Ukraine is moving closer to establishing a comprehensive tax system for cryptocurrency transactions. The National Securities and Stock Market Commission (NSSMC) has proposed a framework that would tax certain crypto activities as personal income, reaching up to 23%.

The key proposal involves a 18% tax plus a 5% military levy on crypto transactions when converting to fiat currency or exchanging for goods and services. Importantly, crypto-to-crypto transactions and stablecoins are proposed for exemption, aligning Ukraine with practices in countries like Austria, France, and Singapore.

Tax Implications for Various Crypto Activities

• Cashing Out/Exchanges: Subject to the 23% tax.
• Crypto-to-Crypto Transactions: Proposed for exemption.
• Stablecoins: Proposed for either exemption or a reduced tax rate (5% or 9%).
• Mining: Considered a business activity; potential for a tax-free threshold for smaller operations.
• Staking: Potentially taxed as "business captive income" or only upon cashing out.
• Hard Forks and Airdrops: Taxable as ordinary income or upon token sale.

The NSSMC suggests a tax-free threshold to ease the burden on smaller investors. Further exemptions might include donations, family transfers, and holdings kept for a specified period. However, these exemptions might not apply to non-custodial wallets.

Ongoing Legal Developments

This proposal follows Ukraine's March 2022 law establishing a legal framework for the crypto market. A draft bill to fully legalize cryptocurrencies is currently under review, with hopes for finalization soon. The government is actively working to clarify the regulatory landscape and ensure responsible implementation.

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