The Israeli tax watchdog is tightening the noose around crypto holders.
Report Says Crypto Disclosure to Be Made Compulsory
While the cryptocurrency markets continue their unprecedented rise with bitcoin (BTC) hitting new all-time-highs almost every passing day, the tax watchdogs around the world have developed a keen interest in the burgeoning industry.
According to a report by local media outlet Globes, the Israeli Tax Authority (ITA) now requires the country’s residents to disclose their digital currency holdings for taxation purposes.
The report posits that dozens of Israeli cryptocurrency holders have, in recent times, received notification from the IRA requiring them to fully disclose all their crypto holdings for tax purposes.
In specific, the IRA has requested data from digital currency exchanges in Israel and outside of the country to gather data and information pertaining to the accounts held by Israelis.
To extract the required information, the IRA applied the EU Common Reporting Standards regulations and the Foreign Account Tax Compliance Act which shared the U.S. Internal Revenue Service (IRS) data with Israel, the report notes.
Per the tax regulator, digital currency investors are subject to 25% capital gains tax but only up to the extent that their activity does not turn into a commercial enterprise.
The report quotes Adv. Leor Nouman, chairman of the tax practice group at the law firms S. Horowitz & Co. He said:
“The Tax Authority renewed its interest in this area recently as a result of two factors: lack of money and a desire to fill the public coffers, where this resource could help. The second main consideration is that Bitcoin has rallied. The Tax Authority’s working assumption is that, as Bitcoin has hit $20,000, quite a few traders must have cashed out, and the Authority assumes it can lay its hands on quite a bit of money.”
More Countries to Follow Suit?
The IRA’s decision to make it compulsory for Israeli residents to disclose their crypto holdings does not really come off as surprising. In fact, several countries are currently planning to introduce comprehensive crypto taxation guidelines for digital currency investors.
As reported by BTCManager in November, the Organization for Economic Co-operation and Development (OECD) is working on developing a unified approach to dealing with cryptocurrency taxation to prevent the emergence of regulatory arbitrage.