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Features of taxation and accounting of transactions in P2P cryptocurrency trading

Cryptocurrency is a relatively new asset that appeared in 2009. As of today, more than 50 different popular cryptocurrencies have already been released, which indicates the significant success of this instrument in the Financial world.

According to the retailers, no bank or government corresponds to the issue and circulation of the cryptocurrency, and the functioning of the system takes place in a decentralized digital network.

However, such claims are NOT entirely true, as it is worth mentioning how the FBI returned part of the ransom to the pipeline operator Colonial Pipeline, which is a payout company for the Dark Side hacker group.

So, the FBI managed to return 63.7 C 75 bitcoins. Details on how the FBI was able to return part of the ransom paid in bitcoin no, however, a number of experts believe that agents managed to trace the ransom to an identified intermediary.

Cryptocurrency, tax features

If you want to deal with cryptocurrency and you are interested in the specifics of taxation and accounting for transactions, it is worth noting that the legal status of cryptocurrency in Ukraine was determined by the Verkhovna Rada only at the beginning of September this year.

However, neither at the legislative level, nor in judicial work, there is still no single approach to understanding the legal nature of cryptocurrency in the system of civil law objects.

It is worth starting with the fact that several attempts were made at the legislative level to resolve issues related to the circulation of cryptocurrency in Ukraine. In 2017, draft Laws "On Stimulating Websites All Cryptocurrency and Their Derivatives in Ukraine" were developed. and "On the circulation of cryptocurrency in Ukraine", which were never accepted.

September 8, 2021 The Verkhovna Rada of Ukraine adopts the Law of Ukraine "On Virtual Assets", which as of today is not sent for signature to the President of Ukraine.

According to the Law "On Virtual Assets" it will be possible to legally exchange cryptocurrency and declare it. In such cases, "white" will appear. market of intermediary services for payment, exchange and storage of cryptocurrency.

According to the adopted law "On Virtual Assets", a virtual asset is an intangible good, which is an object of civil law, has a COST and expressiveness of a set of data in electronic form. A virtual asset can certify property rights, in particular the right to claim other objects of civil law;

Clause 13, part 1, art. 1 of the Law of Ukraine "On the Prevention and Anti-Money Laundering (Vidmivannya) of Proceeds from a Crime, the Financing of Terrorism and the Financing of Proliferation of Weapons of Mass Destruction" It is stipulated that a virtual asset is a digital expression of value that can be traded digitally or transcribed and can be used for payment or investment purposes.

According to the Law "On Virtual Assets" participants Sites All virtual acts - a service provider related to the circulation of virtual acts, as well as any persons who carry out transactions with virtual assets in their own interests.

The provider of services related to the circulation of virtual acts can be exclusively business entities - legal entities that are performed in the interests of third parties by one or more of the following activities:

  • storage or administration of virtual acts or virtual act keys;
  • virtual act exchange;
  • translation of virtual acts;
  • providing intermediary services related to virtual assets.

Thus, in the case of revealing the desire to register a business entity from the selected one of the types of ACTIVITIES indicated above, it is necessary to go through a number of complex procedures, including obtaining a license, contributing a significant amount to the authorized capital of the company and passing a proper Inspection by state authorities power.

In the second case, any persons that have a desire to engage in business related to virtual assets will be under an obligation to use the services of "intermediaries"; legal entities with the appropriate license, which makes it difficult to display such ACTIVITIES before the regulatory authorities, since such a mechanism is currently absent and lead to an increase in the cost of maintaining such a business.

In addition, as indicated by the authorized Law "On Virtual Assets", it is planned to amend the Tax Code of Ukraine, which proposes NOT to tax transactions with virtual assets with VAT, but to levy taxes on income from transactions (the difference between their purchase cost and sales). In this case, the tax rate will be only 5%. However, when this initiative will be adopted and implemented is unknown.

Now is the hour Such income from operations with virtual assets is subject to personal income tax at the basic rate of 18% and the military Assembly - at a rate of 1.5%. The State Tax Service in this situation is talking about taxation of the total income, and not the difference between the sale and purchase price.

According to the most suitable type of ACTIVITY, which reflects the essence of operations with cryptocurrency, according to the letter of the State Statistics Committee dated 05.10.2018 No. 14.4-09 / 435-18, based on the findings of Eurostat, there are such "KVED":

  • activities of trading (exchange) cryptocurrency - 66.19 "Other ancillary activities in the field of financial services, except for insurance and pensions";
  • "Mining" activities and implementation of cryptocurrency - 64.19 "Other types of monetary intermediation".

However, practice shows that the election of "KVED" is not a significant issue in this matter.

One of the main problems that entrepreneurs can stumble with is the introduction of accounting, the reflection of such operations both before regulatory authorities and before subjects of financial monitoring.

Virtual assets

The authors of the law "On virtual assets" note that participants will have the right to open and use bank settlements for transactions with virtual assets. However, if such transactions are carried out by a person in their own interests, it should be remembered that service providers related to the circulation of virtual assets are considered subjects of primary financial monitoring, and therefore they are required to properly verify financial transactions with virtual assets in an amount equal to or greater than 30,000 hryvnias, and if the threshold of 400,000 hryvnias from such operations is exceeded, financial monitoring may request documents confirming the legality of such operations, it will be difficult to confirm.

Moreover, financial monitoring entities providing services for the transfer of virtual assets must ensure that all transfers are accompanied by information about the payer and recipient of the transfer.

Thus, at present, the legalization of the cryptocurrency market in Ukraine depends on amendments to the Tax Code, which will be the features of taxation of operations with virtual assets and the adoption of a number of other regulatory legal acts that will clarify how all this will work.

Otherwise, problems related to budget non-receipt, difficulties with taxation and accounting of transactions and possible tax evasion and abuse by regulatory authorities will remain.

Summarizing, the legislators made an attempt to resolve issues related to the circulation of cryptocurrency in Ukraine, however, without reducing the taxation base the current 19.5% to 5% and the provision of other benefits, the development of this industry and the attraction of both domestic and foreign investment is impossible.