The Israeli tax authorities are not to be taken for granted. Lately, agents of the Israel Tax Authority are reportedly actively seeking out those traders who are engaging in cryptocurrency business, in a bid to demand a fair share of their profits.
With quite a large number of traders in cryptocurrency who are not reporting their holdings or their profits, this is obviously having an effect on the taxman’s revenue as a whole. The authorities are reportedly sending out letters to those whom they suspect are engaging in cryptocurrency activity, demanding them to reveal their past transaction history as well as their current holdings to determine whether these are liable for any sort of taxes. The tax agency is also asking for any mining activity to be reported. According to reports, it is a concerted effort to gain as much revenue as possible from an industry, which is still in its nascent phase.
The agency appears to be acting on the premise that local tax offices have not sent out letters with these detailed demands for information. These people have now been informed that they will be paying taxes exactly like owners of businesses. They also have to fill reports retroactively dating back to 2013, whilst keeping balanced books, reporting taxes as well as salaries to employees just as like any other business such as a factory or a restaurant.
In comments to the Israeli Globe newspaper, the tax agency confirmed that it had issued a circular where it declared that BTC is an asset and that anyone trading it or any other cryptocurrency would have to pay taxes of 25% as well as VAT at 17%.
“Following the publication of the circular, which reflects the Authority’s position on the taxation method of trading and investing in virtual currencies, the Authority is working to locate those active in the field who do not manage a case in the tax authorities. We recommend that those who conduct unregistered activity in these areas take advantage of the existing channels to settle their issues before they will have to endure the unpleasantness that accompanies enforcement,” the Israel Tax Authority said, according to the news outlet.
Although the Israeli tax authorities have not revealed their methods in getting hold of BTC and cryptocurrency traders, it seems that they are using social media accounts to gain access to information. The Israeli banking system is blatantly hostile to any dealings in Bitcoin with reports probably also coming from them when they spot such activities. Additionally, it seems that undercover agents are engaged in monitoring local groups for peer to peer buying on social media sites, such as Facebook, WhatsApp and Telegram where all information is appropriately cross-referenced with other available data and passed over to the taxman.
New to blockchain? Check out CoinGeek’s Blockchain for Beginners section, the ultimate resource guide to learn more about blockchain technology.
