When it comes to cryptocurrency, Israel hasn’t really had a clear focus. Not anymore, though. Now, policymakers have announced a plan to drastically simplify the tax regulations on digital currency.
While discussing cryptocurrencies and their related technologies in a recent interview, Avalon Group’s Chief Investment Strategist Yaniv Pagot explained, “The vision of Israel becoming an international hub is wishful thinking that stems from Israel’s technology abilities … I don’t think there are enough people in Israel ready to give a kosher stamp for something like this yet.”
But all that may be about to change.
Beginning in 2018, Israel is looking to ease up on bitcoin and cryptocurrency taxes by removing current regulations and replacing them with a single capital gains tax, which it expects citizens to pay willingly and honestly.
For the past year, a solid Bitcoin policy has not been in place, and Israel filled in the gaps by being one of the first nations to declare it a financial asset rather than property.
This set hardcore taxation efforts into play, forcing many investors to pay taxes on transactions within 30 days of their completion.
Incredibly, bitcoin has reached the $12,000 USD mark, and continues to soar higher — flirting with $17,000 at press time. Fearing it could somehow get left behind in the digital arena, Israel is trying to lighten the load for its investors.
The new tax policy will allow people to report their gains and transactions once a year rather than every 30 days. Additionally, VAT taxes on crypto-trades may come to an end. All that should be left is a single capital gains tax that investors will be expected to adhere to.
In a similarly motivated move, the Israel Securities Authority has also formed a committee designed to assist in regulating crypto-fundraising for large companies.
This development comes around the same time professor Shmuel Hauser, chairman of the ISA, officially warned residents about the dangers of bitcoin, saying its “bubble-like behavior” should be enough to make people run and hide in fear:
“[Bitcoin] looks like a bubble, smells like a bubble, behaves like a bubbled and feels like a bubble. Which explains the increase from $2,000 to $11,000 in a few months – and then suddenly a 20 percent drop. The chase after bitcoin reminds me of the 19th-century gold rush.”
Additionally, Israel has often been at risk of turning into a “terror-funding state” due to its lax policies for cracking down on cash payments “favored by criminals and terrorists.”
Expecting people to pay their capital gains taxes on crypto simply out of honesty could send the country down a tumultuous road, and it will be interesting to see if the nation’s policy-makers return to stricter guidelines in the future.
Will Israel become the new Bitcoin tax haven? Post your comments below!
Images via The Star, Britannica