The tax authorities in Israel decided to make Bitcoin taxing official. Aside from the leading cryptocurrency, it seems like all cryptocurrencies will be taxed in the same way with their investors being subject to capital gains tax.
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This news comes from an updated circular that was released on Monday. In it, the Israel tax authorities have doubled down on their positions to see cryptocurrencies as ‘assets’ rather than currencies. The authority first issued a draft that clarified the tax guidelines for cryptocurrency adopters in January 2017 after which there were many repeated requests from the community to clarify the government’s stance on the cryptocurrency taxation.
The new circular and the final draft in pace will let the authorities press ahead with taxation guidelines for all the assets. On the other hand, individual investors will be subject to a 25% (capital gains) tax on all the profits they make from their cryptocurrency holdings.
Businesses and exchanges trading cryptocurrencies will also get the same treatment. According to the document, they will be liable to pay a 17% VAT (value added tax). The only exempt category will be individual investors who won’t have to pay VAT – only because cryptocurrencies are seen as intangible assets. However, mining or trading cryptocurrencies will be regulated with the VAT of 17%.
The authority’s stance on classifying the cryptocurrencies as ‘assets’ follows a very similar approach taken by the Israeli central bank. In January, the Bank of Israel announced that “cryptocurrencies should be viewed as a financial asset with all that entails”.
No one knows if other countries will follow Israel’s move – just like no one knows whether this regulation is a good or a bad move. Currently, the crypto traders in Israel certainly don’t look at it with their best hopes.
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