Bill to legalize cryptocurrency submitted to Ukraine's parliament

Ukraine's Digital Transformation Ministry says a bill to amend the Tax Code of Ukraine and other Ukrainian laws regarding the taxation of transactions with cryptoassets has been submitted to the Verkhovna Rada, Ukraine's parliament.

Read alsoUkraine's digital transformation ministry to legalize cryptomining

"The bill was developed by the blockchain community, the Blockchain4Ukraine inter-factional parliamentary association, the Better Regulation Delivery Office (BRDO), and the Digital Transformation Ministry's team," the agency's press service said on November 18.

The draft law defines such concepts as a "virtual asset," a "cryptoasset," "transactions with cryptoassets," a "distributed ledger," a "token," and an "asset-backed token."

In addition, the bill defines the relevant taxation features.

"The first feature is a 5% tax rate on personal income for investment profit from the sale of cryptoassets for a five-year period," the press service said.

The second feature is related to the calculation of investment profit from cryptoasset transactions. It is estimated as a positive difference between the income received by a taxpayer from the sale of a cryptoasset and its value, which is determined from the documented expenses for the acquisition of such a cryptoasset and/or its creation.

The third feature is that sales of cryptoassets are not subject to value added tax (VAT).

"We are confident that the adoption of this [draft] law will create conditions for the launch of the virtual assets market in line with the legislation of Ukraine, taking into account the balance of interests of entities engaged in transactions with virtual assets and the state, which will get additional tax revenue from such transactions," the report said.