The Israeli Tax Authority confirmed on February 19, in an expert circular that the Israel will tax digital currencies as property. The tax authority had launched a draft of circular on January 12, which mentioned digital currencies as units used for funding functions.
Consistent with this definition:
“These currencies will be taken into consideration as assets and will be offered as a sale and the proceeds from their sale will be categorized as capital profits.”
The last version of the circular writes that digital currencies can be taxed by the capital profits tax, which in Israel will be twenty five percent for personal traders, with a forty-seven percent marginal rate for organizations. The United States inner revenue provider has been taxing digital currencies as property since March 2014.
Israel’s general consumption value introduced tax will not be added for personal buyers, as digital currency is considered an intangible asset used for funding functions only, but organizations will need to pay value added tax. The document additionally states that miners can be categorized as sellers for value added tax purposes.
Shahar Strauss, a lawyer at the Israeli regulation company Ziv Sharon & Company, does not consider the new digital property tax definition. Haaretz, the Israel information outlet, stated:
“The company’s stance ignore financial realities. In line with the Tax Authority, making an investment in esoteric currency of some Pacific island that mayn’t be utilized in Israel and plenty of different nations meets the definition of currency and is consequently entitled to a tax exemption, even as making an investment in digital currency isn’t.”
In January, the Israeli tax authority had additionally launched a draft circular considering the techniques of taxing initial Coin offerings with value added tax. This week’s circular does not make any mention of choices concerning initial Coin offerings taxation. Israel’s authorities has been thinking about liberating their personal digital currency, a digital shekel from December 2017, as one possible way to restrict black marketplace transactions in Israel.