Lawyer flags issues in Ukraine’s cryptocurrency taxation bill

Amendments to the Tax Code regulating the taxation of cryptocurrency operations regulate them in the same way as investment income, without accounting for the specifics of digital assets. This was stated in ForkLog’s comment by the CLO of Crypto Neobank Trustee Plus, Lyudmila Kukuetu.

The circulation of primary documentation for investment profits is well established and, overall, unproblematic.

“But virtual assets (VA) are highly specific, and accordingly their turnover and primary documentation have a host of features. At the same time, the legislation puts them in one row, regulating their accounting in exactly the same way,” the expert said.

She warned that the conservative approach of tax authorities and the specifics of VA could in practice generate numerous problems related to tax reporting, accounting and other nuances in taxation.

The document also does not specify how its scope would apply to those who acquired VA before the law takes effect.

“In practice, individuals and legal entities hold such assets in large sums. There has often been an expectation in Ukraine that this would be regulated, but at present we do not see this, unfortunately,” explained Kukuetu.

Speaking about the 18% tax on investment profits from virtual asset operations, the lawyer suggested that “market participants will not be thrilled with this rate, and it could spur outflows of users and companies from Ukraine”.

Earlier in June НКЦБФР Ukraine presented the draft law regulating the taxation of cryptocurrency operations in the country, and the updated text of the ‘On Virtual Assets’ law with provisions implementing the European regulation MiCA.