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Several cryptocurrency traders and investors are considering cryptocurrency as a tax evading haven.
The Israel Tax Authority (ITA) is targeting those who have not reported the gains they have made in the cryptocurrency trading and investment processes. They are now sending notices to members who have not reported their income to the authority.
The tax authority is targeting those who have made frequent travels in a vacation without explaining the travel expenses and also those who do not provide with any substantial evidence of how the expenses for the trip will be met. Apart from such people, the authority is also targeting people who own multiple real estate properties.
Unreported earnings are creating severe suspicion. The fact that many of them are traveling without a paper record about the source of their funds is a matter causing the suspicion. Those who own over 3 apartments are also suspected.
With this being the case, the campaign against cryptocurrency tax evaders is continuing.
Eran Yaakov, the Israel Tax Authority is now focused on taking measures against those who have not reported their gains from crypto investments and trading. The current measure is executed aggressively. These efforts are set to continue.
Bitcoin according to the Income Tax Ordinance is an asset. The sale of Bitcoin is taxable as any other sale of the property. The income made from the sale is capital income, and the gains are capital gains. Therefore, are taxable per the fixed tax rates. All of these were declared in a statement last year by the ITA.
The tax body further clarified that 25% is applicable to capital gains per year, when they dispose of their holdings and 17% chargeable on the value-added tax.
In February 2018, the ITA declared that they would tax cryptocurrencies as they are classified as assets. The rates on the capital gains, however, they said will continue to be the same.
The ITA as well published draft legislation indicating that ICO tokens will be considered to be assets. This meant that ICO investors had to pay taxes to the issuers. The authority stated that when the income of a person from the ICO tokens reaches the level of a business, it will be treated as a Business Income.
The trending controversy is that the central bank of Israel failed to recognize cryptocurrency or the Altcoins as a form of currency; however, the Tax Authority Draft states that the transactions will be considered to be barter based on the value of the assets transacted. Of note, the Regulator prevented the Bitcoin from trading in the Tel Aviv Stock Exchange.
