The Securities and Exchange Commission of Ukraine has proposed a 23% tax on individual income from crypto operations, consisting of an 18% personal income tax and a 5% military levy.
Proposal for Taxation of Crypto Earnings
In a 32-page consultation paper, the agency noted that taxing personal income from crypto transactions is one of the most complex aspects of building a tax system in the field of digital assets.
Challenges in Tracking Crypto Transactions
The main challenge, the commission stated, arises from the anonymous and decentralized nature of crypto, as many transactions occur through decentralized platforms or self-hosted wallets, making automatic tracking by tax authorities impossible. Individuals bear responsibility for reporting their income.
Future Prospects and Simplifications
The commission pointed out that taxpayers often cannot substantiate how much they spent acquiring tokens, particularly if they were obtained via peer-to-peer exchange or mining. Additionally, rapid price swings complicate tax obligations, potentially leading to situations where individuals owe taxes on 'paper profits' lost due to market drops.
The introduction of a new tax on crypto earnings in Ukraine presents additional challenges for taxpayers; however, the development of new reporting models and digital tools could promote a more organized approach in this area.
