The guidance indicates that cryptocurrencies, according to the Financial Action Task Force (FATF)’s definition, are a digital unit of value, which can be traded electronically and transferred, and used as a means of payment or investment.
Ukraine’s revenue agency has published guidance for taxpayers to report their cryptocurrency holdings.
According to the new document, first reported by Russian-language crypto news outlet Forklog, taxpayers should report digital assets as intangible property, similar to intellectual property or licenses for natural resources extraction.
To report cryptocurrency holdings, taxpayers should name the assets they hold (such as bitcoin (BTC), ether (ETH), XRP, etc.) as well as the date of acquisition, the amount owned on the last day of the tax period, and the value of the holdings in Ukraine’s national currency (the hryvnia) according to the exchange rate on the last day of the tax period.
Ukraine has recently made a series of moves aimed at clarifying the rules around cryptocurrency. In February, the country’s Ministry of Digital Transformation made the surprisingly tech-savvy announcement that it was not planning to regulate cryptocurrency mining since it’s already governed by the rules of the blockchain protocol.
Ukraine’s financial watchdog earlier indicated that crypto service providers would be obliged to monitor all crypto transactions above $1,200 and report suspicious activities to the authorities. And a bill yet to be passed by Ukraine’s parliament proposes that crypto-related earnings be taxed at a 5 percent rate for the first five years after passage.
Yet the country has still to come up with a comprehensive set of regulations for the crypto industry, and the new income reporting rules might be the first action with a real impact on Ukrainian taxpayers.
Even though declaring crypto holdings hasn’t been obligatory until now, some Ukrainian politicians have already disclosed some impressive numbers from their crypto wallets.
In 2016, member of parliament Dmitri Golubov reported holding 4,376 BTC and Odessa city council member Anatoly Urbansky declared 256 BTC. In 2019, governor of the Odessa region Maksim Kutsy disclosed 290 ВТС and 11,071 ETH, Forklog writes.
Ukraine Plans to Track Suspicious Crypto Transactions Above $1,200
Ukraine’s financial watchdog intends to track crypto transactions exceeding $1,200, according to the head of the country’s Ministry of Finance, Oksana Makarova.For the first time, Ukrainian anti-money laundering law includes crypto as an asset to be monitored, among others. The threshold for triggering the scrutiny process is 30,000 Urkainian hryvnia (UAH), or US$1,200.
“If exchanges, exchangers, banks or other companies make payments in cryptocurrencies worth more than UAH 30,000 in equivalent, they must verify such transaction and collect detailed customer information”, Makarova said in the interview. “The customer must provide comprehensive information about the origin and destination of their virtual assets.”
If any such operation seems suspicious to the payment service provider, the firm is required to report the transaction to the financial watchdog, the State Financial Monitoring Service (SCFM). The agency also has the capacity to block suspicious transactions and even confiscate cryptocurrencies originating from illicit transactions, Makarova said.
“SCFM has access to an analytical product that allows investigations into the origins of crypto-assets and their uses”, Makarova said. “It is impossible to stop operations now, but it is possible to block crypto wallets and remove illegally obtained crypto assets. This can be done by accessing the crypto’s private keys as a result of complex investigations.”
Cryptocurrency as an asset class is yet to be defined by the Ukrainian law. Makarova said a working group with participation from several national agencies is expected to come up with a new regulation for virtual assets in Ukraine “over the next four months.” A bill suggesting a 5 percent tax on crypto revenue was already introduced to the Ukrainian parliament in November.
There is no official statistics of how much crypto is currently circulating in Ukraine, but Makarova believes the volume is “quite high”, though most money laundering in the country is still conducted with cash.
“I think that our criminals and corrupt officials are quite conservative and still keep the funds mostly in cash”, Makarova said. “Therefore, in the legalization of cryptocurrencies, I see opportunities for the development of this industry in our country, not a threat.”
