On September 19,  2018, the Ukranian Parliament published a draft law which aims to set out the legal basis for the taxation of transactions involving virtual assets. The draft law defines the concept of “virtual assets,”  as well as concepts such as “cryptocurrency,”  “distributed ledger,” “token,” and “mining.”

The draft law (available here in Ukrainian) seeks to introduce a separate taxation regime for transactions involving virtual assets. Thus, if a transaction involves a conversion of a virtual asset into fiat currency, income generated from such conversion may be subject to tax.  Income is defined as a positive margin between the revenue received from the sale of the asset and its value (that is, the confirmed expense to purchase or mine such asset). Conversion of one virtual asset into another virtual asset is not subject to tax.  Moreover, the draft law introduces a favorable tax regime for legal entities dealing with virtual assets; until December 31 2024 a corporate income tax of 5 percent will apply.

Along the same lines, the Ukranian Ministry of Economic Development and Trade (MEDT) has announced its plans to adopt a concept of policy for the regulatory treatment of virtual assets. In particular, the draft concept of policy (available here in Ukrainian) defines the concepts mentioned in the above draft law, as well as the concepts of “smart contract,” “ICO” and “ITO.”  The aim of the concept of policy is to protect consumer rights in the area of virtual assets and create legal certainty as regards the activity of the respective market players. Moreover, it seeks to enable market players in Ukraine to be able to use banking services, conduct ICOs, attract investment and develop the market.

It is expected that the draft law will be adopted by the end of 2018. The concept of policy for the regulatory treatment of virtual assets will be implemented in two stages: (i) during 2018-2019, legal certainty will  provided in terms of the nature of virtual assets and the activity of the respective market infrastructure (e.g., cryptocurrency exchanges and crypto shops); and (ii) during 2020-2021, regulation will be adopted concerning the use of virtual assets, smart contracts and ICOs.


Maksym is a Senior Associate at Baker McKenzie. He joined the Firm in 2007 and currently leads financial services, FinTech and digital transformation sub-practice in the Kyiv office. He also facilitates our Firm's "Technology for Financial Institutions" working group. Maksym worked in our Firm's London and Brussels offices with international securities and European competition law teams accordingly. He has also recently gone on a secondment to a global technology company in the payments industry. Maksym now acts as a secretary to the Banking & Finance Committee of the Ukrainian Bar Association.