Ukraine ‘Supreme Rada’ Deputy Wants 10-Year Tax Holiday For Crypto Ventures
On September 27th, one of the New Powers Movement leaders, Yurii Derevyanko, registered a draft bill which would add changes to the previously registered draft. Instead of taxing people 5-18 percent from any crypto-related earnings like his colleagues want right now, Derevyanko proposed a ten-year tax holiday for any cryptocurrency related business. Derevyanko also noted that Ukraine should impose a zero percent value-added tax on equipment being shipped into the country from abroad if it was bought solely for mining purposes.
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An Unexpected Turnover of the Crypto Taxation Law
This is the first forward-looking virtual regulation proposal that has appeared during the 27 years of Ukrainian independence. That is easily proven by the recent draft bill that was registered on September 14th by a group of Ukrainian deputies. They wanted to impose taxes on all crypto income.
Despite the understandable logic behind draft 9083, Derevyanko has added the 9083-1 amendment to it. Since people in Ukraine are not living the American Dream, they usually don’t pay taxes if their employer doesn’t do that by default. More interestingly, the salaries in the country are so small that employers sometimes pay the taxes for the workers from their own pockets to encourage employees to remain.
That’s why when it comes to a job in the internet field, the chances that usual Ukrainian libertarian or anarchist freelancers would pay bitcoin taxes are practically zero. The new draft bill will likely try overwriting the old draft bill, so a war of bills is coming and we may try calculating the outcomes.
Two Possible Scenarios
The first one is that the 5-18 percent taxation bill will pass. Then, people in Ukrainian crypto will try to hide their operations, businesses, and mining rigs as much as possible. New businesses won’t open, people who wish to pay taxes will flee, or open virtual offices abroad.
Since some Ukrainian cops like to confiscate expensive equipment for themselves, crypto related real life ventures will go dark or pay unbelievable fees to stay in an unstable and unexplored market.
The fact that current crypto-related businesses have the right to stay in the shadows is a powerful incentive to stay working in the country. After forced registration takes place, bribery avoidance will become much more difficult.
However, if the Derevyanko bill takes over, a second scenario is more possible. Crypto ventures in Ukraine will have the opportunity to operate fully lawfully. A stolen farm or a notebook with coins may be returned after a theft because the startup owner won’t be afraid to go to the police.
Also, crypto businesses will likely stay in the country, open bank accounts, transfer money and value back and forth, create working places and opportunities for local programmers, and so on.
Some CEOs may think “I’ll work in Ukraine for nine years and then disappear”. Wise, but until that time a venture may find success. When you are huge and successful you don’t have to leave the country because you can afford to pay taxes, fees, bribes for protection, and stay in the profit zone forever.
Ukraine as a Third of a Kind
Whether Supreme Rada deputies support the first or second draft bill will influence the country’s monetary future and set the environment for its development. This is not to say crypto-friendly regulation is a very rare case in the circle of former USSR countries. Only Belarus and partially Uzbekistan can boast normal attitudes to crypto ventures so far, purposely showing off tax preferences for people using the decentralized economy.
Is the Ukrainian Parliament ready for the new era of anti-taxation and self-moderation? Let us know in the comments section below.
Images via Pixabay, Intefax, Jeff Fawkes