Ukraine taxpayers will now have to report cryptocurrencies

Ukraine’s revenue agency has published guidance for taxpayers to report their digital assets holdings as intangible property, similar to intellectual property or licenses for natural resources extraction.

Cryptocurrency is indicated in the guidance in accordance with the Financial Action Task Force (FATF)’s definition – as a virtual unit with value that can be traded and transferred electronically and can be used as means of payment or investment.

Reporting of crypto holdings will entail taxpayers naming the asset (e.g. bitcoin (BTC), ether (ETH), XRP, etc.), the date of the acquisition, the total amount owned on the last day of the tax period and the value of the asset in Ukraine’s national currency (the hryvnia) based on the exchange rate on the last day of the tax period.

The tax report is a part of Ukraine’s recent moves that aim to formulate and define rules around cryptocurrency. Ukraine’s Ministry of Digital Transformation made surprisingly tech-savvy announcement in February about its intention not to regulate cryptocurrency mining since it’s already governed by the rules of the blockchain protocol.

Ukraine’s regulator indicated earlier that crypto service providers would be obligated to monitor crypto currency transactions above $1,200 and report suspicious activities. A new bill pending Ukraine’s parliament’s approval suggests that crypto-related earnings be taxed at a 5% rate for the first five years after passage.

The country has yet to develop and impose a comprehensive set of regulations for the crypto industry. The new tax reporting rule might be the first action with real impact in that direction.

Some Ukrainian politicians have already reported their crypto holdings, even before it became obligatory. Dmitri Golubov, member of parliament, disclosed the amount of 4,376 BTC in his crypto wallet and Odessa city council member Anatoly Urbansky reported 256 BTC in 2016. Governor of the Odessa region Maksim Kutsy declaired 290 ВТС and 11,071 ETH in 2019.

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