Victoria O.Thu, Aug 5, 2021 7:00 PM
Watchdogs: Israel — Let's go on a Date In a Bitcoin-cafe?
The phenomenon of Israel crypto appeared in 2012 and by the beginning of 2014 had gained huge popularity. ATMs with a bitcoin exchange service, bitcoin cafes and crypto exchanges began to appear rapidly.
To support the participants of the crypto market, a non-profit organization "Israel Bitcoin Association" was created, which is designed to solve problems that arise during the turnover of Israel cryptocurrency in the absence of legal regulation. What about Israel cryptocurrency news? We'll find out more!
History Of Israel Cryptocurrency Regulation
The first attempts to introduce cryptocurrency in Israel began in April 2014. The Israel Tax Service does not give any specific recommendations, only indicates that due to the high anonymity of cryptocurrencies, transactions with them cannot be controlled, and therefore taxed. But, as an Israel financial regulator, it officially warns about the riskiness of such operations.
The Israeli authorities warn against using cryptocurrency. In response, the Israeli Bitcoin Association states that crypto exchanges in Israel cooperate with law enforcement agencies and identify their customers so that fraud is minimal.
The Tax Administration of Israel publishes an official circular defining the procedure and rules for taxation of transactions with cryptocurrencies. Cryptocurrencies are classified as property and are not recognized as a currency or working capital.
In September 2017, the Israeli Securities Commission (ISA) began to investigate the feasibility of regulating ICO, as well as the compliance of this area with the country's securities legislation.
In November 2017, the Israeli Securities Commission (ISA) announced that it was not going to ban the initial coin offerings (ICO) market. At the same time, blockchain technology, in her opinion, should be regulated by a separate regulatory framework.
Later, in November 2017, the Israeli Ministry of Finance announced the creation of a working group to study digital currencies. It includes the heads of large audit companies and professional departments. Will Israel ban cryptocurrency later? Read on!
The Israeli authorities oblige companies that buy and sell cryptocurrency to report income and losses in the same way as it happens with any other assets.
The Bank of Israel says that it does not consider Bitcoin and other crypto assets as currencies.
The Israeli Tax Service has adopted a rather simple position since digital currency is also property, it, like everything else, falls under the definition of assets and becomes taxable. Based on the new draft law, every company that buys or sells digital currency will have to report to the state about its income and losses, exactly as it reports on any other assets. And if the income from cryptocurrencies of an individual reaches the level of an enterprise, he, like the enterprise, will be obliged to pay taxes.
The introduction of a tax does not seem so strange against the background of the rapid growth of the Israel cryptocurrency market. The growing interest of ordinary users and large investors is confirmed by the multimillion-dollar investments made in Israeli startups in the field of cryptocurrency.
Crypto Regulation In Israel Today
To date, the volume of the Israel cryptocurrencies “black market" is about 22% of GDP. Illegal transactions in this sector lead to the fact that the state treasury, according to the Israel Ministry of Finance, annually loses about $15 million in uncollected taxes, which is equivalent to the country's educational budget for 2017.
Israel is an active participant in the crypto world with a large number of crypto-activists opening crypto exchanges and engaged in other activities related to blockchain and cryptocurrencies. Today, more than 60 government-approved Israel crypto companies operate on the Israel market.
The cryptocurrency market in Israel continues to operate without a regulatory framework. This may lead to the fact that fintech companies will develop slowly, and new blockchain startups will appear later than planned.
In accordance with the current Israeli legislation, cryptocurrencies are not recognized as a currency or working capital, the country's tax administration classifies them as valuable property. The sale of cryptocurrencies is considered by the state as the sale of property and the income from the transaction is taxed on capital income. If such operations are performed by an agent regularly and are the basis for registering a business, then the corresponding income is subject to income tax.
Transactions for the sale of cryptocurrencies are subject to VAT. Transactions that are paid using cryptocurrency are considered barter transactions.
Nevertheless, Israel remains an attractive jurisdiction for conducting crypto business. The country is open to innovation and is ready to help fintech startups. There are tax incentives for crypto companies. They can be used if you invest at least 7% of your income in research and development or register a company in Jerusalem or some northern regions.