Home Cryptocurrency Israeli gov’t seeks to track crypto holdings above $61K

Israeli gov’t seeks to track crypto holdings above $61K

by Serge Shlykov

Israeli cryptocurrency exchange Bits of Gold (BoG) has been granted a cryptocurrency management license by the country’s central bank, the Bank of Israel. The license will cover all transactions over the bank’s threshold of NIS 150,000 ($61,000), and will include all cryptocurrency holdings and transfers, both domestic and international.

The Israeli government is investing six million shekels (about $1.3 million) into an initiative that will track the public’s crypto holdings, even if they’re worth less than $61,000 (around $1,000, according to the attorney general). The pilot program, which was submitted to the Knesset in December, is one of the first of its kind in the world.

The Israeli government has announced it is seeking to more closely monitor the country’s citizens holding cryptocurrency, due to concerns that these holdings may be used to engage in illegal activities. Israeli Finance Ministry representative Benjamin Hadad said: “Under the tax rules, there is a provision that from the moment that you hold virtual currency, it is no longer a virtual currency.”. Read more about israel cryptocurrency name and let us know what you think.

 

As part of a “war against black capital,” the Israeli government is stepping its efforts to prevent tax fraud and eliminate loopholes for would-be money launderers. A new legislative obligation to put cryptocurrency users under greater inspection is one of the measures detailed in a new draft law released by the Ministry of Finance this week.

The proposed legislation would require cryptocurrency users who have bought 200,000 NIS ($61,000) in cryptocurrencies or who have crypto assets of the same amount or more to submit a report with the Israeli tax authorities.

This reporting requirement would apply to any Israeli citizen who owned cryptocurrency worth this amount or more on one or more days during the tax year, either individually or on behalf of a kid under the age of 18. According to the bill,

“Virtual currencies have been widely accepted by the general public, and they are now exchanged on exchanges as an asset. Digital currencies may be split into tiny pieces, transmitted quickly through electronic methods, and are not susceptible to examination or monitoring. Virtual currency is a simple and efficient method of hiding income, amassing undeclared assets, and money laundering under certain circumstances.”

The adoption of this proposal, if authorized, will increase state income by 30 million NIS ($9.2 million) in 2022 via extra taxation.

Meni Rosenfeld, the leader of the Israeli Bitcoin Association, sent a letter to Israeli Tax Authority director Eran Yaakov earlier this week, according to Israeli business publication TheMarker. He said that the stringent reporting requirements would result in the creation of a database of Bitcoin owners, which would be unparalleled in comparison to any other asset.

Due to the price fluctuation of virtual assets, Rosenfeld claims that crypto investors may be subject to a reporting requirement one month and then fall below the threshold the next. He stated that the choice to make this change to the law without any discussion or understanding of its consequences severely limits investors’ rights to a hearing and jeopardizes the proposed legislation’s efficacy. 

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Rosenfeld’s concern that the legislation will unfairly discriminate against Bitcoin holders, portraying them as “possible criminals,” was also reported by the Israeli newspaper Globes. The proposed restrictions, in his opinion, run against the grain of facilitating access to the digital economy in general, a sector that already confronts considerable regulatory difficulties.

Itai Bracha, a tax lawyer, told Globes that the legislation was unclear “The authorities have taken yet another aggressive step toward becoming a ‘Big Brother.’ The ruling makes it apparent that the state does not trust taxpayers to adequately disclose and pay their debts.” Despite the classificational similarity between stocks and other assets and cryptocurrencies, Bracha pointed out that in Israel, investors who trade stocks or other assets are not required to file reports.

Israel’s Ministry of Finance is planning to implement legislation that will cover all digital currency transactions over $61,000. This is the equivalent to around $25,000 in US dollars. There are no official figures, but most estimates peg the global crypto-currency market at billions of dollars.. Read more about crypto taxes israel and let us know what you think.

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