A newly-proposed bill with the legislative branch of the Israeli government Knesset submitted several changes to Bitcoin’s taxation. Instead of viewing BTC as an asset and subjecting sales to capital gains tax of 25%, the new legislation plans to recognize it as a currency.
New Proposal: Bitcoin As a Currency Not An Asset
According to a local publication, four representatives from the Yisrael Beiteinu party have presented the new bill on Tuesday. It seeks to amend the taxation of activities related to cryptocurrencies by altering the Income Tax Ordinance to view them as currencies for tax purposes.
Currently considered and recognized as assets, the sales or conversions of digital assets such as Bitcoin subject them to capital gains tax (25%). It provides taxation relief on capital gains only for short-term lenders and certain bonds-related activities as they are taxed at 15%.
However, the four reps argued that the perception of virtual assets needs reexamination. They reasoned that while cryptocurrencies are a relatively new concept, the Income Tax Ordinance hasn’t been amended in years and is falling behind the emerging new digital reality.
The four reps urged Israel to be “among the leaders” of the virtual currency field, whose merits are emphasized during this period of uncertain economic future.
Amendment In Reporting Of Digital Assets
The Knesset saw another bill proposing changes in regards to cryptocurrencies. This one sought to enable reporting of digital assets once every six months or once a year.
If accepted, this would be a significant change from the current format that requires cryptocurrency sellers to submit a tax report to authorities within 30 days of the transaction. Additionally, people need to pay an advance on the tax rate applicable to the transaction’s capital gains.
The explanatory memorandum of the proposed bill reads that “the Minister of Finance, with the approval of the Knesset Finance Committee, may accept cases in which an annual or semi-annual reporting obligation applies to property types. The submission of the report will be paid in advance in the amount of tax applicable under the provisions of the Ordinance on capital gains due to a sale.”
Manny Rosenfeld, Chairman of the Israeli Bitcoin Association, asserted that these proposed bills could enable the country to surface as a global financial center and a leader in the cryptocurrency field.