Ukraine is actively debating the taxation of cryptocurrency income as part of its broader efforts to regulate and legalize the sector. Officials are considering a 5-10% tax on crypto earnings to support the state budget and military, though some policymakers argue for a standard income tax rate of up to 23%.
Taxation Debate and Policy Considerations
Taras Kozak, a member of Ukraine’s securities regulator advisory group, has voiced his support for a lower tax rate, emphasizing that all income should be taxed to sustain national security and defense.
“I lean toward a small tax — between 5% and 10%. All citizen income should be taxed because our state lives on this money, our army fights, we buy weapons, and we maintain security.” – Taras Kozak
However, the government is also considering an 18% personal income tax plus a 5% military levy, which would align crypto taxation with traditional stock investments. Those unable to verify their initial investments could face a 23% tax on total holdings.
Regulatory Progress and Legalization Timeline
While discussions over taxation continue, a comprehensive crypto regulation bill is in progress. Danylo Hetmantsev, head of Ukraine’s finance committee, stated that the first reading of the bill could take place by late March, followed by a second reading soon after. He anticipates full legalization by summer, though Kozak believes the process could extend until 2026.
Crypto Community’s Stance
Many stakeholders in Ukraine’s crypto sector support a 5% tax rate, arguing that a higher tax burden could stifle innovation and drive businesses offshore. Despite these concerns, Hetmantsev has reportedly dismissed expectations for a lower tax, asserting that crypto profits should be taxed like stock investments, meaning the entire capital gain would be subject to taxation.
As Ukraine moves closer to legalizing and regulating cryptocurrency, the debate over taxation remains a crucial point of contention. Whether the government opts for a lower 5-10% tax or implements a higher 23% rate, the decision will significantly impact the country’s crypto ecosystem. With the first legislative readings expected in the coming months, the outcome of this debate will shape the future of crypto adoption and regulation in Ukraine.
