- New bill proposes to change taxation approach towards bitcoin
- Bitcoin and crypto assets are subject to 25 percent taxation
- Another bill seeks to amend reporting intervals for cryptocurrency traders
Israel is considering whether to tax bitcoin as a currency, changing the current taxation approach towards crypto. According to a local media outlet, a political party has proposed a new bill to change the laws governing bitcoin’s taxation by accepting it as a currency. The new bill, which was submitted in the Israeli government’s Knesset legislative branch, recommended several modifications for cryptocurrencies.
In Israel, the revenue generated from trading bitcoin and other cryptocurrencies is subject to a 25 percent tax. As such, the new seeks to exempt bitcoin from capital gain taxation by amending the Income Tax Ordinance. The legislation was presented by four members of the Yisrael Beiteinu party on September 22.
Tax bitcoin as a currency, not an asset
In May last year, an Israeli central district court ruled in favor of the central bank, which recognizes bitcoin as an asset. A blockchain entrepreneur, Noam Kopel, had appealed against the decision to impose taxes on bitcoin by Israel’s tax authorities. Kopel argued against taxing the sale of bitcoin. A new attempt to tax bitcoin as a currency has just begun.
Bitcoin‘s status as an asset in Israel is subject to capital gains tax. Tax agencies only offer reliefs to CPI-related lenders and sale of bonds and commercial securities who only pay 15 percent from gains generated.
Nevertheless, the legislators argued that the discernment towards cryptocurrencies needs to be reevaluated. Furthermore, the legislation seeks to add another section on Income Tax Ordinance regarding the “determination of distributed digital currency.” The finance minister can specify the terms for recognizing cryptocurrencies as a distributed digital currency fro the section.
Another cryptocurrency bill tabled in the Knesset
Besides, the Knesset received a separate bill seeking to define reporting intervals for cryptocurrencies to taxation authorities. The new bill wants to space the reporting intervals for digital assets once every six months or once every year.
Currently, cryptocurrency traders in Israel report the sale of a crypto asset after 30 days are over. The new legislation is looking to extend this interval to once every year or once every six months. Recognizing bitcoin as a currency might be the gateway to increased adoption of cryptocurrencies in Israel.