Ukraine Considers Cryptocurrency Legalisation as an Alternative to Tax Increases

The legalisation of cryptocurrencies in Ukraine could serve as an effective alternative in the search for new sources of tax revenue, according to Alexander Bornyakov, Deputy Minister of Digital Transformation for IT Development.

He proposed developing incentivising taxation for transactions involving this new class of assets, maintaining a balance between the interests of the state and businesses.

Bornyakov referred to a tax bill proposed by the Ministry of Digital Transformation. Its provisions include:

• A preferential income tax on crypto operations for individuals for eight years: 5% for the first three years, 9% for the next five years, and 18% after eight years;
• Maintaining the profit tax for crypto providers at 18% or a 9% tax on withdrawn capital, provided the special Diia.City regime is applied.

According to the official, such an approach would create favourable conditions for the development of the sector and allow for the resumption of crypto-fiat gateways.

Additionally, companies would be able to open bank accounts, and market participants would receive legal protection and investment insurance.

“This will contribute to the formation of a taxpayer culture among users. Meanwhile, data on the amount of taxes collected during the transition period will help determine the optimal business tax rate in this area,” concluded Bornyakov.

In the Verkhovna Rada, a tax bill authored by the NSSMC has also been registered. It proposes a rate of 18%, which has faced public criticism.

Earlier, MP Yaroslav Zheleznyak discussed the challenges of legalising the Bitcoin market in Ukraine.