Tuesday, January 28, 2020

Israel’s Tax Agency Aggressively Pursuing Cryptocurrency Tax Evaders

Adedamola Bada
I'm Damola, a computer engineer from Obafemi Awolowo University. A crypto enthusiast, marketer, and writer who is seeking to achieve career excellence through hard work and positive contribution to the organization that aspires for excellence. Contact me on damolabada@gmail.com

The agency in charge of collecting tax in Israel has set their sights on people trading with cryptocurrency as well as investors, in an effort to reduce tax evasion to the lowest level.

According to Calcalist, an authority in financial news in Israel, the Israel Tax Authority (ITA), has taken serious approaches to ensure the arrest of anyone who fails to disclose the gains they made from trading and investing in cryptocurrency.

For instance, notices were sent out to individuals who were suspected of withholding the report of their crypto trading income. According to Calcalist, one of the ways to identify an individual who is a crypto tax evader is regular overseas travels without any evident documentation showing the breakdown cost of the trip. Furthermore, multiple property owners in the real estate sector are not exempted as suspects. Here is a quote from the Calcalist:

“The authority has also sent notice letters to Israelis whose activity raises suspicion of unreported earnings, such as those who travel abroad frequently without having the requisite funds on paper, or those who own over three apartments…”

More Strategies against Crypto Tax Evaders

Another strategy employed by the Tax Authority Of Israel is to facilitate the opening of tax accounts for individuals who are yet to submit the report of their cryptocurrency profits. Eran Yaakov, the person in charge of the Israel Tax Authority, has promised that the ongoing search to arrest crypto tax offenders will not cease.

Two years ago, the ITA pronounced Bitcoin and cryptocurrencies in general as assets which makes them subject to taxation. ITA released a statement at the beginning of last year, saying:

“[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.”

New Rates on VAT and Capital Gains

During the period, ITA made it clear that crypto traders will be taxed 25% on their capital gains each time their assets change ownership and also, the crypto exchange platforms will pay a VAT of 17%.

Earlier in the year, precisely in February, the tax agency became more resolute in enforcing taxation on cryptocurrencies since they have been classified as assets, but there will be no changes to the rates already put on VAT and capital gains.

Just last month, the ITA released a draft legislation that will require ICO tokens to be regarded as assets thereby making them taxable. The ICO issuers and investors are expected to pay this tax on ICOs.

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