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Israel lays tax on cryptocurriences

The Israel Tax Authority has declared bitcoin and other virtual currencies taxable assets rather than money.

To comply with current legislation, cryptocurrency owners will be obliged to pay the 25% capital gains tax every time they sell virtual coins. Bitcoin exchanges, miners and other companies dealing with cryptocurrencies will have to take 17% VAT from their clients, according to the official explanation circulated by the Tax Service in response to many requests from cryptocurrency users.

For entities working with cryptocurrencies, the new tax classification means considerable changes in their workflow, including the accounting process. For example, if a company is paid for its services in bitcoins, the deal should now be regarded as a barter rather than a standard payment operation. It will cause a lot of extra paperwork, the Finance Magnates points out.

The fiscal agency will request traders to submit a record of crypto transactions with bank statements and transaction screenshots.

The Israel Tax Authority revealed its plan to make cryptocurrencies a subject of taxation as early as the end of 2013.

Israel boasts a vibrant and fast-growing cryptocurrency and blockchain market which may be negatively affected by the strict approach adopted by the Tax Authority. The number of local startups that have recently held successful investment campaigns and ICOs indicates the high interest to crypto technologies in the country. Thus, in February 2016 Simplex - the Israeli-based bitcoin trading platform, raised $7 million in one investment round.

Source: coinfox

  • January 18, 2017 10:23 AM MSK