The Israel Tax Authority has started targeting Israelis that own cryptocurrencies in a bid to enlarge the country’s revenue. A report disclosed this news on December 23, noting that the agency is pushing for the disclosure and taxation of all crypto assets owned by Israeli citizens. Reportedly, the tax authority sent letters to digital wallet holders, directing them to report all crypto assets and income. On top of this, the entity also requested that exchanges across the globe, including Israel-based ones, to provide information about Israelis that have invested in the crypto sector.
According to the report, the authority recently applied the EU Common Reporting Standards (CRS) regulations, which allow for the automatic exchange of financial account information. As such, it receives all pertinent data about all Europe-based accounts that Israelis hold. The entity also receives additional information from FATCA, which passes on data from the US Internal Revenue Service (IRS) to Israel.
At the moment, the tax authority works under its 2018 tax guide, which states that Israeli crypto investors are subject to 25% capital gains tax, provided their activities do not change into businesses. If their activities become commercial enterprises, the document states that the investors will have to pay a two-stage corporate tax or a marginal tax, depending on the individual tax brackets.
Increasing emphasis on crypto taxation
Per the report, the tax authority’s renewed interest in crypto taxation comes after BTC’s exemplary performance in recent months. The country’s regional tax assessment offices reportedly sent crypto holders letters saying that they are aware of the crypto activities that do not match with the holders’ tax returns and warned to report their crypto income before the agency comes after them.
Trying to decipher why the Israel Tax Authority suddenly has more interest in crypto taxation, Leor Nouman, the chairman of the tax practice group at one of Israel’s leading law firms, S. Horowitz & Co., said,
“The Tax Authority renewed its interest in this area recently as a result of two factors: lack of money and a desire to fill the public coffers, where this resource could help. The second main consideration is that Bitcoin has rallied. The Tax Authority’s working assumption is that, as Bitcoin has hit $20,000, quite a few traders must have cashed out, and the Authority assumes it can lay its hands on quite a bit of money.”
Ron Tsarfaty, Bit2C’s CFO and compliance officer, echoed Nouman’s sentiments saying, the tax authority had increased enforcement to target crypto holders that have not yet reported or those that reported falsely. He added that the agency is motivated by the deepening economic deficit and BTC’s recent surge. Per Tsarfaty, crypto holders that fail to report might face challenges when it comes to paying taxes because banks can block funds that come from crypto sales.
The post The Israel Tax Authority renews its interest in crypto taxation appeared first on Invezz.