A new bill proposed by a Ukrainian lawmaker would hand cryptocurrency holders a 10-year break from reporting earnings on their tax returns.
Cryptocurrency miners would also get import tax breaks for the next decade, and would not face VAT penalties when selling on mining gear in the Ukrainian market. The moratorium would end on December 31st 2029.
Interestingly, Bill No. 9083-1 – the title of which translates as ‘On Amending the Tax Code of Ukraine on the taxation of transactions with virtual assets in Ukraine’ – also sets out important definitions of industry terms around virtual assets, including cryptocurrencies, tokens, mining and transactions. Independent MP Yuriy Derevyanko proposed the draft law to parliament, and the Verkhovna Rada will consider it this week.
Speaking in parliament in a video posted to YouTube, Derevyanko said: “The draft law… defines cryptocurrency as an intangible asset with the title to the units of value recorded on the distributed ledger of transactions.
“I believe that we should impose a 10-year moratorium on taxing this area. We should streamline and legalise this huge [industry] which will become a driving force of the new economy. These people represent the creative class…We have to provide for their development and stop them from emigrating.”
No licences are currently required to mine cryptocurrencies in Ukraine, and there is no complete legal framework for cryptocurrency trading. A draft law proposed in August would have put a 5% tax on all businesses or individuals holding cryptoassets.
The Financial Stability Council, which represents the National Bank of Ukraine and the Ministry of Finance, has offered positive support for cryptocurrencies in the past, without nailing down specific economic policy.
Crypto As A Way Out
Ukraine’s central bank has faced a torrid time of late trying to calm forex markets and stabilise its economy. According to local media UNIAN, the country saw a 36% rise in foreign trade deficit from January to August this year, and is currency, the hryvnia, weakened by over 5% against the dollar last month. Yet there are signs of hope.
The Ukrainian stock market is showing signs of recovery and in a macroeconomic review for September 2018 the NBU noted how feverish demand for foreign currencies was on the wane. Despite hostile Russian actors continuing to destabilise the country’s borders to the east, legislators are still working on a blockchain-based central bank cryptocurrency, named the e-hryvnia, in a bid to aid the country’s economic woes.
Attracting inward investment remains an extremely high priority for parliament. Seeing the kinds of businesses moving their operations to small low-GDP nations like Malta, Jersey and other crypto-friendly jurisdictions only makes this desire all the stronger.
Note: Some parts of this article were translated from Ukrainian.