As part of the “war against black capital,” the Israeli government is stepping up efforts to prevent tax evasion and plug loopholes for potential money launderers. Among the measures outlined in the draft new bill released by the Ministry of Finance this week, a new statutory requirement is being proposed to strengthen the scrutiny of cryptocurrency users.
This bill Users of cryptocurrency who have purchased 200,000 Israeli shekels (US$61,000) of cryptocurrency or their crypto assets with the same or more current value will be required to submit a report to the Israeli tax authorities.
This reporting obligation applies to any Israeli citizen who personally or on behalf of a child under the age of 18 holds cryptocurrency worth this amount or more within one or several days of the tax year. The bill states:
“Virtual currencies have become commonplace among the public, and they are actually traded on exchanges as an asset. Digital coins can be subdivided into small units, which are relatively easy to transfer electronically, and are not subject to supervision or inspection. In this case Under the circumstances, virtual currency is a convenient and effective means to hide income, accumulate undeclared assets and money laundering.”
If approved, the implementation of this measure will increase national revenue by approximately 30 million shekels ($9.2 million) in 2022 through additional taxes.
According to a Report Earlier this week, Meni Rosenfeld, chairman of the Israeli Bitcoin Association from TheMarker, an Israeli business newspaper, wrote a letter to the head of the Israeli Tax Service, Eran Yaacov. He believes that extensive reporting obligations will create a Bitcoin database (Bitcoin) Holder-Compared with any other asset, this is unprecedented.
Rosenfeld further argued that due to the price fluctuations of digital assets, cryptocurrency investors may be eligible to fulfill reporting obligations after a month, and then shortly after the threshold is lowered. He wrote that the decision to amend the law in a hurry without any dialogue or understanding of its impact greatly undermines investors’ right to hear and undermines the effectiveness of the proposed legislation.
The Israeli daily Globes also cited Rosenfeld’s objection that the law would excessively discriminate against Bitcoin holders and classify them as “potential criminals.” In his view, the proposed measures are contrary to wider access to the digital economy, a market that is already facing major regulatory challenges.
Tax lawyer Itay Bracha told the Globe that this law is “another positive step the authorities have taken to become a’big brother’.” The decision clearly shows that the state does not believe that taxpayers will report and pay what they owe. payment. Bracha also pointed out that in Israel, reporting obligations are not mandatory for investors trading stocks or other assets, even though they are classified as equivalent to cryptocurrencies.