The Ukrainian National Securities and Stock Market Commission (NSSMC) has introduced a new tax framework for cryptocurrencies.
On April 8, Ukraine proposed a crypto tax that could reach 23% on specific transactions, while maintaining certain exemptions. The NSSMC published a framework outlining an 18% personal income tax on crypto-derived income, along with an additional 5% military contribution. NSSMC Chair Ruslan Magomedov emphasized that “the issue of crypto taxation is not hypothetical, but a rapidly approaching reality.”
The framework is intended to equip lawmakers with the tools to make informed decisions, weighing the pros and cons of each proposal. “These aspects can have a critical impact on the market and tax responsibility,” added Magomedov.
Stablecoins and crypto-to-crypto trades exempt
A key aspect of the proposal is that the tax would apply only when crypto is converted into fiat currency or used to purchase goods or services. Crypto-to-crypto transactions would remain tax-exempt. The commission also suggested that it “makes sense” to exclude stablecoins pegged to foreign currencies from taxation, or apply a reduced 5% or 9% rate, since Ukrainian tax law already excludes income from foreign exchange transactions.
The framework also addresses other crypto-related activities such as mining, staking, hard forks, and airdrops. Mining is generally treated as a business activity, while staking may be classified as “business income” or taxed only upon conversion to fiat. Hard forks and airdrops may be taxed either as ordinary income or upon conversion to money.
Exemption thresholds proposed
The NSSMC proposed that tax exemption thresholds could help “ease the burden on small investors,” a practice common in other jurisdictions. Exemptions were also proposed for donations, family transfers, and long-term holdings.
Last December, Daniil Getmantsev, head of the Ukrainian Parliament’s tax committee, announced that a draft law to legalize crypto was under review and expected to be finalized early this year. Ukrainian President Volodymyr Zelenskyy had already signed a law in March 2022 establishing a legal framework for a regulated crypto market in the country.
