IN a new wave of events around the crypto sphere he Israeli tax authority has confirmed forthwith the taxation of virtual currencies.
According to authorities position; virtual currencies are recognised as asset (property) hence subject to due taxation. Following this new legislation which is an aftermath of a proposed draft tendered in January 2018, cryptocurrency investors in Israel will be charged Capital Gains Tax just as for assets with rates ranging from 20% to 25% and 17% extra as Value Added Tax for crypto related businesses.
This order comes at a time when most national tax authorities who studied the gains and highs of the virtual currency market; deem it a fair share asset with regards to its huge profit overtime for investors and users alike.
This new tax legislation covers provisions for investors, traders and miners who have a total tax rate of 42% (VAT inclusive) in line with the new directive. While there is yet to be finalized tax legislation on Initial Coin Offerings (ICO’s), tax authorities have proposed a draft order to this effect.
By this order, all cryptocurrency related activities by users are subject to a financial profit and loss report as with every other asset.
Despite this, Chairman of the Israeli Bitcoin community; Manny Rosenfeld and a few cryptocurrency enthusiasts opined that the new tax specification portrays the government’s stance on virtual currencies as tangible assets and a pointer to a long standing future for the crypto community given this recognition.
These opinions seem to go against an opposition stance to the unique decentralized and anonymous feature of virtual currencies.
In all, reactions and compliance to this new order are expected with this tax model forming a likely blueprint to be adopted by more countries