The Israeli Tax Authority (ITA) is sending notices to the residents asking them to disclose their digital currency holdings for taxation purposes.
As reported by Globes last week, the tax department has sent notices to dozens of Israelies who own digital currencies. Additionally, it is seeking data from cryptocurrencies both inside Israel and abroad that are offering cryptocurrency purchasing services to Israelis.
“We have information about your activities that does not match your tax return,” the tax notices read.
Further, the ITA applied the EU Common Reporting Standards (CRS) regulations to automatically receive information on the activities with the funds parked in Europe by Israelies.
Currently, the Israeli tax agency levies a 25 percent capital gains tax on crypto profits. However, this is only applicable to individual investors and not for commercial enterprises.
Bitcoin Rally Alerted the Taxman
According to the local industry experts, the interest of the tax department in crypto investment was fueled by the recent rally of Bitcoin as it believes that crypto traders have started to cash out from cryptocurrencies.
“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,” Adv. Leor Nouman, Chairman of the Tax Practice Group at the law firm, S. Horowitz & Co., told the publication. “The second main consideration is that Bitcoin has rallied.”
A similar approach of tax departments was seen in the United States and many European countries as well. The IRS started to send fresh warning letters to American citizens, claiming discrepancies with the income and paid taxes.
Meanwhile, properly taxing crypto incomes is still a headache among global agencies. South Korea is actively trying to bring crypto tax rules in the country, which was recently postponed until 2022.