Israeli legislature recommends Bitcoin should be treated for tax purpose

Ritika Sharma
Ritika Kumari Sharma is an Economics Honors graduate from the University of Calcutta. She is completely into finance and believes that cryptocurrencies are the future. She is an enthusiast learner about the cryptocurrency and blockchain technology.
  • Israel’s unicameral parliament stated that the 25% tax on Bitcoin as capital gains tax, has been outdated.
  • The bill states that the regulatory reality in Israel isn’t adapted as of the existing reality in this industry.

According to a new bill that was proposed by four members of the Israeli party (Yisrael Beiteinu), Bitcoin should be treated as fiat for tax purposes. 

The four members have voiced their opinion

On September 22, member of Israel’s unicameral parliament’s (Knesset) four members, MK Oded Forer, Yevgeny Soba, Yulia Malinovsky, and Alex Kushnir, proposed a bill for the amendment of tax law, so the cryptocurrencies, would not be subjected to capital gains taxes. They stated that the 25% tax on Bitcoin as capital gains tax, has been outdated, and now the country should amend the current income tax ordinance further to a more adaptable version. As the current tax policy of Israel, states to treat Bitcoin as an asset and taxed 25% on conversion to fiat, should now be taxed at 15% for short-term lenders.

The bill states that the regulatory reality in Israel isn’t adapted as of the existing reality in this industry. Additionally, it stated that for the development and growth of Israel’s high-tech industries, cryptocurrencies can continue to play a significant role.

Can the proposal become law?

As cryptocurrencies could be taxed at lower rates, individuals in Israel with an income of 75,720 INS ($21,781 approx), were to be taxed at 10%. MK Forer said that the government should consider the blockchain technology for digital payments, during a pandemic, as today the Knesset announced another nationwide lockdown starting from Friday. MK Forer also stated that in this situation when social-distance has been forced on the country, digital payments option can possibly be promoted. Additionally, he mentioned that they need to give a boost to growth engines when the future of the economy of the country is unclear.

The major roadblock for digital currencies in Israel, is the Bureaucracy. Since the government declared digital currencies to be treated as an “asset” for tax purposes, some crypto regulators have had an ongoing battle, though the blockchain and crypto firms have a good growth in Israel.

We can’t say how the situation will play out.

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