[2018-09-07] Ukrainians Advised to Pay 19.5% Tax on Crypto Incomes

[moriskarlov]

In the absence of dedicated regulation, Ukrainians are expected to pay the regular 19.5% income tax rate on their profits from crypto-related activities like trading and mining, a high-ranking official from the Finance Ministry in Kiev explained. Crypto investors are free to report their digital funds as either property or financial assets.

Cryptos? Tax Them Like Tanks

The question, what do crypto investors owe the state, is a hot topic in many communities around the world. Authorities in most countries rush to tap into their incomes and profits, often before they’ve regulated the space and legalized digital assets, and sometimes even when they refuse or fail to recognize cryptocurrencies in any of their roles. Ukraine is no exception.

However, according to Ukraine’s deputy-finance minister Sergey Verlanov, the issue with cryptocurrencies is clearly exaggerated as far as taxation is concerned. Everything is much simpler than it seems at first glance, he claimed in an interview with Ekonomicheskaya Pravda.

“Two types of operations are possible with cryptocurrency – mining and trading. So, let’s say we bought bitcoin for 1,000 hryvnias; then we were lucky and it went up to 2,000 hryvnias; then we left bitcoin and credited the funds to a bank card. The change is 1,000 hryvnias. We impose income tax on it,” he elaborated, adding: “The rate is 19.5% – whether this is a lot or a little, is a rhetorical question.”

See more - https://news.bitcoin.com/ukrainians-advised-to-pay-19-5-tax-on-crypto-incomes/

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[LeGaulois]

The rate in this country related to the incomes taxes it currently at 18% (the highest has been 20%) So what? Not much difference compared the incomes. Any income shall be taxed, there is nothing wrong. At least the citizens know where the government stands, but generally speaking, any citizen knows there will be a tax.

https://tradingeconomics.com/country-list/personal-income-tax-rate

[darkangel11]

The rate in this country related to the incomes taxes it currently at 18% (the highest has been 20%) So what? Not much difference compared the incomes. Any income shall be taxed, there is nothing wrong. At least the citizens know where the government stands, but generally speaking, any citizen knows there will be a tax.

https://tradingeconomics.com/country-list/personal-income-tax-rate

Actually only people who were indoctrinated by years of government propaganda can repeat slogans like "all income should be taxed". Saying no to the abuse is one of the fundamental rights of a human being and taxes of almost 20% on top of VAT, excise and property tax are an abuse.
If the government is abusing the miners they should leave and move the businesses somewhere else. A couple months ago there was a case of Polish government abusing traders and demanding 1% of every transaction on top of the income tax. As a result all exchanges moved out of the country. 

[kevoh]

The rate in this country related to the incomes taxes it currently at 18% (the highest has been 20%) So what? Not much difference compared the incomes. Any income shall be taxed, there is nothing wrong. At least the citizens know where the government stands, but generally speaking, any citizen knows there will be a tax.

https://tradingeconomics.com/country-list/personal-income-tax-rate

Cryptocurrency is a gray area, it is not just any income that should/can be subjected to tax anyhow. What happens in the case where a declared profit on cryptocurrency suddenly loses 70% of its value just before there is an intention to pay tax?

[veleten]

The rate in this country related to the incomes taxes it currently at 18% (the highest has been 20%) So what? Not much difference compared the incomes. Any income shall be taxed, there is nothing wrong. At least the citizens know where the government stands, but generally speaking, any citizen knows there will be a tax.

https://tradingeconomics.com/country-list/personal-income-tax-rate

the citizens know that they will not pay it anyways
since nobody does, more than 35% of the ukrainian economy is in a shadow (different sources=different figures)
https://www.researchgate.net/publication/269626771_Shadow_economy_in_Ukraine_modelling_and_analysis   this one gives a 34% figure
which I personally,consider way too low
it is common to recieve only slightly higher than the minimal wage to keep the taxes low and get the rest as they say "in an envelope" i.e. in cash
do you really expect anyone in their right mind would go and pay 19.5% of their trading or any other ,including mining,income to state?

[Kakmakr]

The 19.5% Capital Gains tax is not that high, if they do not have to pay an additional VAT on the proceeds of their Crypto currency activities. We will just have to accept that governments will tax our Crypto currency income, but we should complain if we are taxed differently than other commodities or currencies. <Double Tax> 

I should say, if you use bitcoin to pay for services and products, then VAT should come into play, but if you trade with Crypto currencies and you use it as a commodity, then Capital Gains should come into play.    <But not both>

[Taki]

Did they made this 19 and half to it doesn't seem too high?! Why not to make it 19 or 20%? The tax is pretty high by my opinion. Such politic surly will not help to crypto adoption and popularity in Ukraine.

[Sutters Mill]

20% is pretty standard tax rate for things like capital gains. It's also the entry level income tax bracket for many countries.

The rate in this country related to the incomes taxes it currently at 18% (the highest has been 20%) So what? Not much difference compared the incomes. Any income shall be taxed, there is nothing wrong. At least the citizens know where the government stands, but generally speaking, any citizen knows there will be a tax.

https://tradingeconomics.com/country-list/personal-income-tax-rate

Actually only people who were indoctrinated by years of government propaganda can repeat slogans like "all income should be taxed". Saying no to the abuse is one of the fundamental rights of a human being and taxes of almost 20% on top of VAT, excise and property tax are an abuse.
If the government is abusing the miners they should leave and move the businesses somewhere else. A couple months ago there was a case of Polish government abusing traders and demanding 1% of every transaction on top of the income tax. As a result all exchanges moved out of the country.  

The whole income tax is theft stance is a whole different argument, but I think taxes are beneficial for a functioning society. Maybe income shouldn't be taxed but instead just rely on heavy sales taxes, especially on luxury goods. That way people can chose whether they want to spend their money/pay taxes rather than be forced to.

Did they made this 19 and half to it doesn't seem too high?! Why not to make it 19 or 20%? The tax is pretty high by my opinion. Such politic surly will not help to crypto adoption and popularity in Ukraine.

What does it matter whether it's up or lower another percent? Paying taxes is expected in the vast majority of countries, and bitcoin or any other industry isn't exempt from taxes so paying them shouldn't be a deterrent to anyone other than those who are just using bitcoin to evade taxes.

[aso118]

The rate in this country related to the incomes taxes it currently at 18% (the highest has been 20%) So what? Not much difference compared the incomes. Any income shall be taxed, there is nothing wrong. At least the citizens know where the government stands, but generally speaking, any citizen knows there will be a tax.

https://tradingeconomics.com/country-list/personal-income-tax-rate

Actually only people who were indoctrinated by years of government propaganda can repeat slogans like "all income should be taxed". Saying no to the abuse is one of the fundamental rights of a human being and taxes of almost 20% on top of VAT, excise and property tax are an abuse.
If the government is abusing the miners they should leave and move the businesses somewhere else. A couple months ago there was a case of Polish government abusing traders and demanding 1% of every transaction on top of the income tax. As a result all exchanges moved out of the country. 

If you don't like the way your taxes are spent, join a political party and try to change the system.
If you don't like paying taxes to the government, try to emigrate to a country where taxes are lower.
The Ukranians are lucky to pay tax at such low rates; not many countries have income tax at lower than 20%.

[hatshepsut93]

If you don't like the way your taxes are spent, join a political party and try to change the system.
If you don't like paying taxes to the government, try to emigrate to a country where taxes are lower.
The Ukranians are lucky to pay tax at such low rates; not many countries have income tax at lower than 20%.

In Ukraine pretty much everyone evade taxes, workers get small legal salary and then the rest of the salary in cash, freelancers don't declare their income because it's nearly impossible to comply with regulations, businesses (including the mega-rich) are always looking for schemes that make them avoid taxes. The tax bodies in Ukraine don't work the same as in the West, they don't chase citizens unless they are really rich, and in Ukraine any income is legal until proven otherwise. So, when people sell small amounts of coins on exchanges (up to ~$5,000), they just withdraw it to their bank account and most likely won't have to worry about taxes.

[squatter]

Cryptocurrency is a gray area, it is not just any income that should/can be subjected to tax anyhow. What happens in the case where a declared profit on cryptocurrency suddenly loses 70% of its value just before there is an intention to pay tax?

You have a couple options. If you realize profit, incurring taxes, you could segregate the amount due for taxes from your total capital and hold it in fiat currency. The alternative is to realize the losses on reinvestment (70% in the above case) to drastically lower the total tax liability.

In Ukraine pretty much everyone evade taxes, workers get small legal salary and then the rest of the salary in cash, freelancers don't declare their income because it's nearly impossible to comply with regulations, businesses (including the mega-rich) are always looking for schemes that make them avoid taxes. The tax bodies in Ukraine don't work the same as in the West, they don't chase citizens unless they are really rich, and in Ukraine any income is legal until proven otherwise. So, when people sell small amounts of coins on exchanges (up to ~$5,000), they just withdraw it to their bank account and most likely won't have to worry about taxes.

I have a friend in Ukraine and this is accurate. I mentioned this article to him and all he had to say was "meh."

[slaman29]

I think this ruling is not yet clear or misunderstood by everyone. Including the people who wrote this. I say this because this totally different in principle to what Ukraine has been trying to achieve with Bitcoin and blockchain. They know they are so far behind and economically lagging, so they are moving up, trying on one hand to be friendly to crypto business, trying to set up blockchain hubs, even now testing elections by blockchain vote.

So you want to tax 20% of people crypto incomes? This is so going to be bad for any of the things they want to do, if true.

[Doorex]

Still better, then banning trading, but i think not much effect will be achieved, lots of methods in ukraine no to declare this income. Using btc atm for example and getting cash, if we are not speaking about million of dollars of course.

[hatshepsut93]

I think this ruling is not yet clear or misunderstood by everyone. Including the people who wrote this. I say this because this totally different in principle to what Ukraine has been trying to achieve with Bitcoin and blockchain. They know they are so far behind and economically lagging, so they are moving up, trying on one hand to be friendly to crypto business, trying to set up blockchain hubs, even now testing elections by blockchain vote.

So you want to tax 20% of people crypto incomes? This is so going to be bad for any of the things they want to do, if true.

There was no ruling, cryptocurrencies are still not regulated. It was just an interview with official where he has told that the general law and tax rates apply to Bitcoin, like if it is a common commodity.
Also, Ukraine is not really trying to do anything with blockchain and cryptocurrencies, all the news that you've been hearing are really insignificant, some MP's propose their half-baked drafts, and that's it, there's no interest from the leaders of the country whatsoever. Same with blockchain voting, it's just some guy from the Central Electoral Commission who decided to post the voting results, that are already public, to NEM's blockchain, anyone can do that.

[cybersofts]

The rate in this country related to the incomes taxes it currently at 18% (the highest has been 20%) So what? Not much difference compared the incomes. Any income shall be taxed, there is nothing wrong. At least the citizens know where the government stands, but generally speaking, any citizen knows there will be a tax.

https://tradingeconomics.com/country-list/personal-income-tax-rate

Actually only people who were indoctrinated by years of government propaganda can repeat slogans like "all income should be taxed". Saying no to the abuse is one of the fundamental rights of a human being and taxes of almost 20% on top of VAT, excise and property tax are an abuse.
If the government is abusing the miners they should leave and move the businesses somewhere else. A couple months ago there was a case of Polish government abusing traders and demanding 1% of every transaction on top of the income tax. As a result all exchanges moved out of the country. 

If you don't like the way your taxes are spent, join a political party and try to change the system.
If you don't like paying taxes to the government, try to emigrate to a country where taxes are lower.
The Ukranians are lucky to pay tax at such low rates; not many countries have income tax at lower than 20%.

Thank God that I'm not from Ukraine 19.5% of my CRYPTO earnings? what a joke
The way I see it, it is not fair to pay ~20% of my crypto earnings as a tax.
Anything below 12% is okay, but paying above that is a JOKE, trust me.
No disrespect, Ukraine is one of the corrupt nations in the world.
Therefore, the majority of the taxed money goes to the politicians' pockets.
Why pay your hard earned profits up to 20% to a country where politicians loot    
 

[Samarkand]

...
there's no interest from the leaders of the country whatsoever.
...

These 3 Ukrainian politicians would respectfully disagree:
https://www.coindesk.com/45-million-ukrainian-lawmakers-reveal-big-bitcoin-holdings/

Recent disclosures by members of Ukraine's national legislature revealed that three
lawmakers have a combined wealth in bitcoin of more than $45 million.

This may be just the tip of the iceberg. Who knows how many other politicians
own huge amounts of BTC (probably gained by granting favors to various lobbies?)
and just didn´t declare their holdings.

They have no real interest in regulating anything related to BTC, because the average
citizen of the Ukraine isn´t owning any cryptocurrency anyway. But the elites
are obviously taking full advantage of the features of Bitcoin.

[darkangel11]

The rate in this country related to the incomes taxes it currently at 18% (the highest has been 20%) So what? Not much difference compared the incomes. Any income shall be taxed, there is nothing wrong. At least the citizens know where the government stands, but generally speaking, any citizen knows there will be a tax.

https://tradingeconomics.com/country-list/personal-income-tax-rate

Actually only people who were indoctrinated by years of government propaganda can repeat slogans like "all income should be taxed". Saying no to the abuse is one of the fundamental rights of a human being and taxes of almost 20% on top of VAT, excise and property tax are an abuse.
If the government is abusing the miners they should leave and move the businesses somewhere else. A couple months ago there was a case of Polish government abusing traders and demanding 1% of every transaction on top of the income tax. As a result all exchanges moved out of the country. 

If you don't like the way your taxes are spent, join a political party and try to change the system.
If you don't like paying taxes to the government, try to emigrate to a country where taxes are lower.
The Ukranians are lucky to pay tax at such low rates; not many countries have income tax at lower than 20%.

What a smart thing to say. Don't like the police, become a policeman and change their ways from the inside.
Don't like politics, become a politician and change something. That's a typical "fuck off" stance taken by people who lack arguments.
And I saved the best for the end: If you don't like it, move to another country.

P.S. Many countries have lower rates than 20. For instance, in Romania it's 10%, in Russia 13%, Slovenia 16%, and so on. I've intentionally picked some of the countries located in the same region. Worldwide there's many with no income tax at all.

[timerland]

It's similar to how pretty much what most of the countries around the world are doing with crypto taxation.

If you receive income in the form of bitcoin, obviously you're going to still be paying tax on it. Bitcoin is not some sort of tax haven, it's merely just another form of payment for income in the government's eyes. And this is pretty much all this policy is about, there is nothing special here. It's interesting though that they're regarding CGT as regular income tax, and having no apparent policy as to using bitcoin as a means of payment.

The tax on mining though could mean that some miners could potentially be disincentivized from mining within Ukraine, due to 20% of their profits being taxed.

[Harlot]

I can agree to others saying that the rate is fair considering that a lot of capital tax rate are on 20% upwards not to mention they are not fixed to all income levels. Also rates like this one is considerably lower compared to what is being taxed to your income. This is a start for Ukraine as this is better than going against cryptocurrency users in that country unlike some countries who are still stuck until now on classifying what kind of asset are cryptocurrencies which is pretty crucial for determining the kind of tax.

[squatter]

It's interesting though that they're regarding CGT as regular income tax, and having no apparent policy as to using bitcoin as a means of payment.

Ukraine does it like the US then. In the US, capital gains are taxed at an individual's ordinary tax rate. It doesn't matter where the gains come from -- gold, real estate, bitcoins, etc. Everything is taxed at the same rate. There was a bill introduced to Congress last year to exempt cryptocurrency payments below $600 from taxation, but it didn't get added to the tax overhaul. I'm not sure if it's still being considered.

The tax on mining though could mean that some miners could potentially be disincentivized from mining within Ukraine, due to 20% of their profits being taxed.

Presumably it was already being taxed. This isn't a new policy or anything.