Amid advancements on disclosures from crypto firms, the Ukrainian government has released data to support claims. The data released by the government briefs that the crypto industry as a whole has failed to contribute a remarkable sum to the nation.
On Wednesday, the Ukrainian government released a notice regarding the nation’s crypto taxes. The government stated that crypto exchanges operating in the nation have failed to contribute more than $81 million to the national budget in over a decade.
Reportedly, the government said that the Economic Security Bureau of Ukraine reported unrelated crypto exchanges were responsible for at least 3 billion Hryvnia ($81 million) in lost taxes from 2013 to 2023.
According to local media reports, the government body briefed it had analyzed the trading activity of exchanges created by residents of Ukraine. This had roughly $55 billion in Bitcoin, Ether and Tether volume over the same time period.
Weighing on the issue, Andriy Pashchuk, deputy director of the Economic Security Bureau, said that there are different view points on how crypto transactions should be taxed. While there is no clear system, the authorities would act in coordination with the system adopted. However, until then, millions in taxes would continue to be lost.
There are different points of view on how these transactions should be taxed, and [the bureau] will act in accordance with the provisions adopted by the deputies. But it is obvious that while the issue drags on, the state continues to lose tens of millions in taxes every month.
Amid the increasing adoption of cryptocurrencies, Ukrainian President Volodymyr Zelenskyy signed a piece of legislation called “On Virtual Assets” into law in March 2022. The legislative bill aims establishing a regulatory framework for cryptocurrencies in the country.
At the time, the government said it was working on amending Ukraine’s tax and civil codes to accommodate the legal framework, but no amendments to existing requirements have been implemented as of August 2023.
The legislation on virtual assets which was first rejected by the country’s president but was later approved in March 2022, following a few revisions. In September 2022, Ukraine brought in a few amendments to its legislation to be on point with the EU’s Markets in Crypto Assets (MiCA) regulation, making it a remarkable move.
Simultaneously, last year, the National Securities and Stock Market Commission of Ukraine (NSSMC) announced a a new advisory council to oversee the development of the regulation of digital assets in the country. The group will primarily focus on the essential amendments required to the country’s tax code including the topic of taxing cryptocurrency transactions.
Reportedly, many Ukraine-based crypto users on Telegram questioned whether they would be required to provide “backpay” of taxes based on transactions over the last 10 years. Some pointed to the government’s failure to adopt the regulations despite the law being passed in 2022.
Michael Chobanian, founder of an Ukraine-based crypto exchange, told media that it was “impossible” for government officials to take taxes on transactions before the framework was put into place. According to Chobanian, the bureau’s figures were “taken from the air” and its analytics “lacks understanding of the business”.
Notably, his statements also come in the light of National Bank of Ukraine (NBU) demands to crypto businesses to submit their financial statements within seven days.
Simultaneously, Ukraine has been highly reliable on cryptocurrencies considering the high share of crypto donations amid the war struggles. As of February, almost $70 million in crypto donations had been pledged in support of Ukraine. It added that the majority of donations were made in Bitcoin and Ethereum, the two largest cryptocurrencies by market capitalization.