The number of digital assets holdings in Israel has increased over time. This has been triggered by many factors that have led to the increasing adoption of BTC (Bitcoin) and blockchain technology. As the crypto markets thrive so is the governments’ interest in the billions of dollars circulating the markets. In Israel, the tax authority is keen on imposing taxes on crypto holding.
According to a report by Globes, the Israeli government through the Israel Tax Authority (ITA) is targeting to increase its revenue. The agency is now targeting BTC (Bitcoin) and other digital asset holders. The Eran Yaacov led agency has already communicated to hundreds of crypto holders. More so with BTC (Bitcoin) holders in the country to fully disclose their holdings for taxation.
ITA is on the verge of securing vital information as the organization is pealing pressure on players in the sector to report on all their investments and income. The government has gone further in seeking vital information on Israelis’ trading activities from exchanges within Israel and around the globe.
The report sites that the authority is keen on applying the European Union Common Reporting Standards (CRS) guidelines to get information from the sector players. In applying the rules, ITA can access information like financial account information and information on funds held on the exchange from within the country. The taxman depends on the CRS in accessing the information on crypto trading within Israel and. It will also acquire more data through the FATCA, an agreement that gives the Middle East nation access to data from the US Internal Revenue Service (IRS).
In 2018, ITA through its publication declared that cryptocurrency holders will be subjected to a 25% capital gains tax. It is, however, important to understand that the holdings are subjected to two-stage taxation as the investor’s activities become commercial. The double taxation includes a marginal tax, purely based on the investor’s tax bracket, and a corporate tax.
Truth be told the government through ITA wants to take advantage of the thriving BTC (Bitcoin) market performance and the potential feature gain from the entire crypto space. As per the time of writing this article the price of BTC is now almost $35000. This is a perfect time for the taxman to not only tap into the multi-billion industry but also boost its source of income.
In terms of market cap, the entire crypto-economy is worth $880.40 billion with a 24hrs trading volume of around $311.40 billion as per the time of writing the piece. BTC is the most dominant digital asset commanding $642.1 billion of the entire crypto market.
In Israel, crypto traders transact on crypto exchanges, local and international. These are currently under pressure from the authorities to submit trading transactions and to comply with the regulations as they want to continue their operations in the Middle East nation.
The latest move by the Israeli government has attracted reactions from several players in the sector. Adv. Leor Nouman, the chairman of the tax practice group at the law firm S. Horowitz & Company, stated two factors that trigger the renewed interest from the tax authority. He points out lack of money and the skyrocketing BTC price as main factors leading to ITA interest in crypto markets regulations. He confirms that his clients are receiving inquiries from the Tax Authority asking them general questions on their holdings.
Adv. Ron Tsarfaty, the Compliance Officer and CFO at Bit2C a leading exchange in Israel admit that there is an increasing trend in the tax collection by the taxman. He further warns the traders who haven’t complied with the regulation of possible future tax problems if they are not careful.
