Four members of the Israeli parliament, the Knesset, have moved for a bill proposing amendments to the country’s tax codes to eliminate capital gains tax from digital currency earnings.
The Israeli tax laws currently see Bitcoin and other digital currencies as assets, so any conversion of them into local fiat would bring taxes according to the set capital gains rates.
Currently, Israeli individual investors have to pay a capital gains tax of 25 percent on most assets, but if the proposed bill is passed, this will be decreased significantly.
All the legislators behind the bill tabled on Tuesday are members of the nationalist political party, Yisrael Beiteinu. They claimed that the regulatory situation in Israel around digital currencies is not prepared, and thus, it will not match the industry requirements.
The Participants in Forex Trading and their Role in the MarketGo to article >>
“[Digital currencies] will remain the engine of growth that will enable the technology industry to grow and flourish,” the translated summary of the bill stated.
Moreover, one of the bill sponsors argued on the advantages of using blockchain technology for promoting digital payment options during the ongoing Coronavirus pandemic.
Debates on Crypto Taxation
After long legal uncertainties and fights between the pro-crypto groups and governments, the Israeli government declared cryptocurrencies as assets in 2018, bringing some clarity in the industry. That was cemented last year as an Israeli court recognized Bitcoin and other digital currencies as assets, not currencies.
Meanwhile, the crypto tax debate is still hot across the world as regulators are struggling to tax digital currency gains properly. While reporting of incomes from the virtual currency is an issue, regulators are fighting to properly define cryptocurrencies.
Notably, most of the countries levy capital gains tax on crypto gains. South Korea recently amended its tax laws to charge a flat 20 percent tax on all crypto incomes.