Ukraine’s National Securities and Stock Market Commission (NSSMC) has proposed a tax on cryptocurrency gains to regulate the industry and align with European Union standards. The plan introduces an 18% income tax and a 5% military levy on crypto profits, with some categories eligible for preferential rates.
Taxation Proposal Details
The NSSMC’s proposal introduces a standard tax rate of 18% on capital gains derived from crypto transactions and an additional 5% military levy specifically designed to fund the country’s defense initiatives. This comprehensive taxation framework would apply to individuals and businesses engaging in crypto-related activities, including trading, investing, and selling.
To accommodate the diverse nature of crypto transactions, the proposal identifies specific categories of taxpayers, such as small investors, start-ups, or individuals with limited income who may qualify for 5% or 9% preferential tax rates. This provision aims to promote broader participation in the digital market while considering the financial strength of specific groups.
Tax on Crypto Gains Proves Lucrative
Ukraine is just one of many countries that have promoted the option of an income tax on crypto gains; some countries have reaped the dividends of such a decision.
For instance, the Kenya Revenue Authority (KRA) collected over $77.5 million (Sh10 billion) from 384 different crypto traders around its region during its last financial year, which ended in June 2024. Following the contributions, the KRA is beginning to see the crypto market in a more positive light and plans to secure additional taxes from local crypto traders.
However, some see it as an extra burden. Like Ukraine, Hong Kong revealed plans to strengthen its pro-crypto position by relieving a few selected establishments, including hedge funds, private equity funds, and investment vehicles of the super-rich, from paying tax on gains made from crypto trading and investments.
Notably, Hong Kong’s move to welcome more crypto investors via zero taxation gives it an edge over its biggest competitor, Singapore, the home of the first Asian bank to offer over-the-counter (OTC) crypto trading services for institutional investors.
