A draft bill setting out how crypto-related income should be taxed in Ukraine has been submitted to the country’s parliament, the Verkhovna Rada.

The bill was prepared by Ukraine’s Digital Transformation Ministry, the Blockchain4Ukraine inter-factional parliamentary association and the Better Regulation Delivery Office (BRDO) organization, the ministry said in an announcement reported by local news agency UNIAN on Tuesday.

The document, authored by 13 members of the parliament, is intended to amend Ukraine’s Taxation Code and introduce principal concepts related to the crypto assets. The bill defines such assets as a “special type of valuable property in the digital form, created, accounted for and disposed of electronically,” such as cryptocurrencies, tokens and other kinds not specified in the draft.

“We are confident that the adoption of this [draft] law will create conditions for the launch of the virtual assets market in line with the legislation of Ukraine, taking into account the balance of interests of entities engaged in transactions with virtual assets and the state, which will get additional tax revenue from such transactions,” said the ministry.

If the bill passes parliament, the income from trading virtual assets will be calculated as the difference between the purchase price and the amount received at sale. Gains should be declared as “other” type of income, while losses may not be balanced out to reduce the total financial result before taxes, the document says.

Crypto income would generally be taxed at the standard rate, which is 18 percent in Ukraine. But in better news for traders, there’s an initial 5 percent rate on personal income from the sale of crypto assets for a five-year period following approval of the bill (assuming it passes).

Sales of crypto assets would not be liable for value added tax (VAT).

Tokenized assets would see a different tax application, being defined as digital assets certifying ownership or non-property rights. In these cases, tokens would be taxed in the same way as the goods or services backing them.

Michael Chobanian, founder of the Ukraine-based crypto exchange Kuna and president of the Blockchain Association of Ukraine, said he believes the law would work, but there are other hurdles facing the industry that need to be addressed.

“If the National Bank of Ukraine doesn’t allow banks to open accounts for crypto businesses in Ukraine nothing for the industry will really change,” Chobanian said.

The ministry recently announced a partnership with the Binance cryptocurrency exchange for assistance developing regulations for crypto in the country. It’s unclear, however, if the exchange was involved with the development of the taxation bill. Binance didn’t comment when asked.

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