According to data released by the Ukrainian government, cryptocurrency firms offering services in Ukraine have failed to contribute over $81 million in taxes to the country’s budget in the past decade. This comes after the country passed a crypto bill into law in 2022 that amends its tax code to allow the country to generate taxes from cryptocurrency transactions.
A Huge Loss In Revenue For Ukraine
In a notice released on Wednesday, the Economic Security Bureau of Ukraine stated that unrelated cryptocurrency exchanges were responsible for the loss of approximately 3 billion hryvnia in taxes (roughly $81 million) between 2013 to 2023.
The country’s foremost regulator noted that it had evaluated the trading actions of exchanges founded by residents of the country, which had $55 billion in Bitcoin (BTC), Ether (ETH), and Tether (USDT) volume in rough estimates over the same period.
Speaking to local media following the announcement, Deputy Director of the Economic Security Bureau Andriy Pashchuk stated that there were different perspectives on “how these transactions should be taxed and (the bureau) will act in accordance with the provisions adopted by the deputies.” He opined that while these issues drag on, the country keeps losing “..tens of millions in taxes every month.”
Crypto Tax Losses Follow Passage Of Landmark Bill
The recent loss of revenue follows the recent passage of the legislation “On Virtual Assets” by the Ukrainian parliament in 2022. The law was enacted amid the growing adoption of cryptocurrencies as a valid means for conducting transactions.
The bill, which was signed into law in March 2022 by Ukrainian President Volodymyr Zelenskyy, sought to create a regulatory framework for cryptocurrency transactions in the country.
Total market cap continues to decline | Source: Crypto Total Market Cap on Tradingview.com
At the time of passing the bill, the government stated that it was looking to amend the country’s civil and tax codes to accommodate the new legal framework. However, as of August 2023, no such amendments have been executed.
Ukraine also brought some minor amendments to the legislation in September 2022 to ensure that the law was in sync with the European Union’s Markets in Crypto Asset (MiCA) regulation.
Since then, many crypto users in Ukraine have taken to Telegram to ask whether they would be mandated to provide “backpay” of taxes based on transactions over the last decade. Some noted the government’s failure to properly adopt the regulations despite the passage of the law in 2022. According to one Telegram user with the username Vini2010w, had the government adopted the law, “everything would have been settled a long time ago.”
Ukraine has been heavily reliant on cryptocurrency donations amid the ongoing war with Russia. About $225 million in cryptocurrency donations have been pledged in support of the country since 2022 following Russia’s invasion. The vast majority of the donations were made in Ethereum and Bitcoin, the two most popular cryptocurrencies and the largest by market cap.