Many nations and governments have repeatedly tried to find ways to regulate cryptocurrencies, and more importantly bitcoin, over the past year. The task is not that simple and officials are finding it complicated to apply rules and laws to such a volatile and digital type of asset. Many lawmakers see digital currencies as paths to illegal activities, including the purchase of drugs, terrorism funding, money laundering and tax evasion. Another issue that governments have to deal with is how to treat and “view” those currencies, in order to decide how to properly tax them. This is still something that many countries are thinking about and Israel has come out on the subject last Monday.
The Israeli government has announced that cryptocurrencies will be considered as property when it comes to regulation and taxation. This had previously been discussed by the Tax Authority and is now confirmed. Gains from cryptocurrency trading will fall into the “capital gains” tax bracket. These will be taxed between 20% and 25%. The government has even taken into account cryptocurrency mining activities and crypto for businesses, which will incur a 17% VAT, in addition to the capital gains taxation.
Israel is one of the first countries to declare how it will tax virtual currencies. It is also interesting to see that the country has not been against cryptocurrencies but rather open about them. This is very different from other nations who have been trying to make them illegal. The country has even previously discussed the potential creation of its own cryptocurrency. In the future, will Israel be one of the most open countries about cryptocurrencies? Could we see a government-backed token or exchange platform?
TLDR: The Israeli government announced that they will tax virtual currencies, coins, and tokens, as property. Israel is very open about the blockchain technology and digital currencies.