News

Newsletter – September 16, 2024

·       Ukraine's Automatic Information Exchange: Key Dates and Impact

·       Ukraine Ranks High in 2024 Global Crypto Adoption Index

·       Verkhovna Rada continues to work on a draft law on tax increases

·       The IMF offers Ukraine to increase VAT rates

Ukraine's Automatic Information Exchange: Key Dates and Impact

Ukraine is set to begin automatic information exchange under CRS (Common Reporting Standard) and CbCR (Country-by-Country Reporting) by the end of September 2024. The State Tax Service (STS) will start exchanging data on newly opened accounts and high-value personal accounts (over $1 million) by this deadline. By September 2025, this will expand to include lower-value personal accounts and corporate accounts exceeding $250,000.

CRS requires financial institutions to gather and share details of non-residents' financial accounts, such as account balances, ownership information, and tax identification. Ukraine has implemented CRS through a legislative framework that came into force in April 2023. The data will allow STS to tax undeclared foreign income and monitor controlled foreign companies (CFCs).

CbCR, focusing on multinational enterprises with consolidated revenues of €750 million or more, is not yet mandatory in Ukraine. The Multilateral Agreement for CbCR exchange must still come into effect, but this is expected in the near future.

Importantly, under martial law, accounts with total balances below $250,000 will not trigger tax obligations. Regular updates on Ukraine's exchange partners and agreements are recommended.

Ukraine Ranks High in 2024 Global Crypto Adoption Index

Ukraine ranks 6th in the 2024 Chainalysis Global Crypto Adoption Index, highlighting its strong engagement with cryptocurrency. While the Central and Southern Asia and Oceania (CSAO) region leads the rankings, Ukraine stands out as a key player in Eastern Europe, demonstrating notable activity across centralized and decentralized services (DeFi).

The index measures countries based on their use of cryptocurrency services, with Ukraine excelling in both retail and institutional crypto transactions. The country ranks 7th in centralized service value received, 5th in retail centralized service value, and maintains strong positions in DeFi transactions. This reflects Ukraine’s increasing reliance on cryptocurrency for both individual and business use, driven by economic pressures and the need for alternative financial systems.

Ukraine’s crypto activity mirrors broader global trends, where DeFi and altcoin usage are rising in emerging markets. The ongoing conflict and economic challenges may further fuel crypto adoption, as digital assets offer more secure and accessible financial alternatives. This makes Ukraine one of the leading countries in Eastern Europe in the evolving global crypto landscape.

For more detailed insights and a complete breakdown of global rankings, read the full 2024 Geography of Cryptocurrency Report.

Taxes

Verkhovna Rada continues to work on a draft law on tax increases. It is about draft law No. 11416-d, which has been failed in the first reading and sent for preparation for re-consideration.

Here are the main changes expected:

1. Increase of the military tax rate from 1.5% to 5%.

2. Establishment of a military tax for PEs of the first and second groups in the amount of 10% of the minimum wage;

3. Establishment of a military tax in the amount of 1% of income for PE of the III group;

4. Increase in the military tax is limited to the tax period in which martial law will be abolished;

5. Military tax will be directed through the special fund exclusively for the financing of the Armed Forces;

6. Increase in the income tax rate of financial institutions;

7. Establishment of monthly advance payments for gas stations;

8. ⁠Monthly reporting on Personal Income Tax, Military Tax and Single Social Tax. This norm will come into effect on January 1, 2025.

Taxes

The IMF offers Ukraine to increase VAT rates. During the work of the fund's mission in Kyiv, the International Monetary Fund proposed to increase VAT in Ukraine by 2 percent. Currently, this issue has not been finally resolved, it will be considered at a meeting of the relevant committee of the parliament, which is planned in the near future.