The devoted community of cryptocurrency enthusiasts will now have a good perspective on what bitcoin-related laws will apply in the country.
Israeli tax authorities issued a document establishing that cryptocurrencies cannot be considered as financial bonds nor as legal tender payment methods, but are in fact taxable assets – just like in the US.
The legal situation of Bitcoin has always been the cause of concern in some countries around the world. The Israeli authorities have finally stated their position on the cryptocurrency, and merchants will now be able to manage their tax returns in the “digital asset industry”.
However, not everything is as it seems, some users expressed their preoccupation about the restriction clauses in the document, alleging that the usage of digital assets in the country will result in high fees. The authorities stated:
[bitcoin]will be considered in accordance with the Income Tax Ordinance as “assets” and their sale will be taxed as a sale of “property.” Income from their sale will be classified as capital income and capital gains will be taxed according to fixed tax rates.
The document expressed that companies won’t be able to explicitly label their payments received on Bitcoin, but as an agreement between both parties. Tax authorities are aware of how difficult is to make records on the cryptocurrency world, but their idea is to record everything on paper, bank reports, and screenshots every time a transaction is done. The report states that “Payments realized through an exchange operation using virtual currency for the provision of goods and services must be subject to a withholding tax”.
Users will have to pay taxes from their profits in Israeli currency, up to 25% of the total amount of each Bitcoin sale. Likewise, it was made clear that all cryptocurrency related operations with a profitable end, (like mining) will enter in the ‘business category‘ and the users will have to charge their clients a tax of 17% that will be sent to the government.
The cryptocurrency community in the country is hoping for the release of new details that could reveal that the regulations are not that as strong as they seem. Alternatively, this may cause an exodus of Bitcoin-specialized Israeli companies.