Peculiarities and Challenges of Cryptocurrency Taxation in the Context of IT-Business Development

Abstract

The article examines the problems of cryptocurrency taxation as an integral component of the IT business in Ukraine. It analyzes the challenges arising from attempts to tax the exchange of cryptocurrencies into fiat money at high rates, alongside the absence of taxation on the conversion of fiat money into cryptocurrencies. The authors propose a cryptocurrency taxation system based on the principles of “fiat entry” and “fiat exit,” applying a turnover tax rate of 1–2%. Contemporary challenges require the development of an effective strategy and tactics for taxing participants in the cryptocurrency market. Such an approach should not focus on increasing tax revenues merely to cover budget deficits – an outcome that could trigger the relocation of market participants to other tax jurisdictions –but rather aim to facilitate the legalization of already operating entities and stimulate additional domestic and foreign investment in Ukraine’s internal cryptocurrency market.. The purpose of the article is to examine the specific features and problems associated with cryptocurrency taxation in Ukraine and to substantiate the need for developing an effective taxation system for cryptocurrency assets in the context of integrating Ukraine’s financial system into the global economy. The study identifies the political-legal and financial-economic challenges accompanying cryptocurrency taxation in Ukraine; outlines the expected and most probable consequences of adopting legislation regulating the cryptocurrency market; and proposes an effective, in the authors’ view, approach to cryptocurrency taxation through a turnover tax of 1–2% instead of corporate income tax, personal income tax, and the military levy. The cryptocurrency sector in Ukraine remains one of the few areas of the national economy that continues to operate effectively despite population decline, economic contraction, the ongoing Russian-Ukrainian war, and other adverse conditions. However, the regulatory and taxation framework currently proposed by the state may significantly hinder the development of the sector and provoke capital outflows abroad. The development of effective regulatory conditions requires further scholarly research aimed at achieving an optimal balance in cryptocurrency taxation by ensuring both increased budget revenues and the sustainable growth of the cryptocurrency industry.