Ukraine’s Securities and Exchange Commission (SEC) has proposed a comprehensive tax policy that would impose a 23% levy on individual income from cryptocurrency operations. The proposed rate combines the country’s 18% personal income tax with a 5% military levy.
Regulator Cites Challenges in Enforcement
Outlined in a newly released 32-page consultation paper, the regulator acknowledged the complexities involved in taxing crypto-related income, describing it as “one of the most challenging aspects” of digital asset regulation.
The SEC cited the decentralized and anonymous nature of cryptocurrency as a key obstacle for enforcement. “Many operations with cryptocurrencies are carried out through decentralized platforms or using self-hosted wallets, which makes automatic tracking by tax authorities impossible,” the document stated.
Unlike traditional income sources such as salaries or dividends—where tax obligations are typically handled by employers or financial institutions—the burden of tax compliance in crypto lies directly with individual users.
“Unlike traditional income, where the tax obligation is fulfilled by a tax agent, in the case of virtual assets this function is most often performed by the individual,” the commission noted.
Acquisition Costs and Volatility Complicate Taxation
The regulator also highlighted difficulties in determining acquisition costs, especially when tokens are obtained through peer-to-peer transactions, airdrops, or mining. Without clear purchase records, taxpayers often struggle to demonstrate their actual investment.
Market volatility further complicates the issue. Fluctuations in crypto prices may result in individuals being taxed on unrealized gains that could vanish amid a market downturn.
Proposal Recommends Simplified Reporting
The commission expressed concern that many taxpayers may be unaware of their obligations. To address this, it recommended simplified reporting procedures, taxation at fiat exit points, and digital tools to assist individuals in meeting compliance requirements.
The proposal is currently open for public feedback and forms part of Ukraine’s broader effort to build a comprehensive regulatory framework for digital assets.