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Ukraine is making a significant move to regulate its cryptocurrency market. The government plans to legalize and tax cryptocurrency transactions, with expected tax rates ranging from 5% to 10%. However, for assets whose sources cannot be documented, tax rates could reach up to 23%. This regulation could have substantial implications for investors and the cryptocurrency market.
Cryptocurrency Tax Rates Are Set
The Ukrainian government aims to impose a tax of 5% to 10% on cryptocurrency transactions. This regulation is intended to strengthen the state budget and support military expenditures.
Danylo Hetmantsev, Chairman of the Verkhovna Rada Finance, Tax, and Customs Policy Committee, announced that the main text of the bill is ready. However, the government has not yet established a clear framework for tracking cryptocurrency transactions.
The bill is expected to be voted on for the first time in parliament this month. However, full implementation may take until 2026. City Council member Taras Kozak noted that the public finds a 5% tax rate fair, but the government is also considering a more traditional tax model.
23% Tax on Untraceable Cryptocurrencies
Under the current tax system in Ukraine, individuals pay a total of 23% in taxes, which includes an 18% income tax and a 5% military tax. The new regulation suggests that this tax could also apply to cryptocurrencies that cannot be documented. This could impose a significant tax burden on investors, who may need to prove the sources of their initial investments. Otherwise, they risk facing a 23% tax rate.
If lower tax rates are adopted in the cryptocurrency market, this could increase adoption. However, strict regulations and high tax rates may drive investors to seek alternative options. Ukraine’s cryptocurrency ecosystem is at a critical juncture with this new regulation.
