Ukraine’s Securities and Exchange Commission has suggested a new tax framework that would impose a 23% tax on individuals’ earnings from cryptocurrency transactions. This includes an 18% personal income tax and an additional 5% military levy.
In a 32-page consultation paper, the commission acknowledged that taxing crypto income is one of the most challenging aspects of forming a comprehensive digital asset tax regime. The decentralized and pseudonymous nature of crypto makes enforcement difficult, especially as many transactions happen on decentralized exchanges or through private wallets, limiting oversight by tax authorities. Unlike conventional financial systems where intermediaries handle reporting, individuals in crypto must self-report their earnings.
“Unlike traditional income (salary, dividends), where the tax obligation is fulfilled by a tax agent (for example, an employer or a bank), in the case of virtual assets this function is most often performed by the individual.
Ukraine’s Securities and Exchange Commission
The commission also highlighted that users often find it difficult to verify the cost basis of their crypto assets. This is especially true in the case of peer-to-peer deals, mining rewards, or airdropped tokens, where there may be little or no transaction history. Moreover, crypto’s inherent volatility further complicates matters, as individuals could be taxed on unrealized gains that may quickly evaporate due to market swings.
Another concern is the lack of public awareness regarding crypto-related tax responsibilities. To address this, the agency is considering introducing streamlined reporting methods, taxation only upon conversion to fiat (fiat-exit tax), and digital tools to help users accurately report their crypto income.
