Tax agencies around the world continue to put pressure on cryptocurrency companies, with the goal of making their operations transparent to regulators. The latest example of such behavior shown by the tax service of Israel, which convinced the local stock exchange with more than 50,000 customers to report transactions for large traders to the regulator.
Cryptocurrency exchange Bits of Gold based in tel Aviv, agreed to report on their large clients, the Tax administration of Israel. The company will transmit information to the tax authority of any trader who has carried out transactions of more than $50,000 in the last 12 months. Platform agreed after the authorities have inspected the company’s offices to gather information about major customers of the exchange.
Cryptocurrency exchanges operating in the country already must report large transactions to the Office for combating money laundering and the financing of terrorism of Israel. However, this information automatically goes to the tax authority because there are laws that prohibit such transmission of data to protect personal information of citizens. Moreover, the tax authority of Israel has no legal right to force companies to report on their customers without their consent and judicial precedents that support this action.
In addition, according to reports, the agreement with Bits of Gold is a sign that the Israeli tax authority is planning to reach out to a greater number of local companies and exchanges in an attempt to reach similar arrangements. And this is just the latest initiative of the Israeli authorities in kriptonyte.
From 1 June, Israel joined
in force regulations for cryptocurrency. Under the law operators, to provide access to digital currencies should comply with AML/KYC to report suspicious cryptocurrency clients, as well as at least five years keep records of addresses of digital wallets, the IP address and the number of each cryptocurrency.
In addition, this spring the Committee for the study and regulation of IPOs tokens (ICO) of the securities Commission of Israel (ISA) has released
a series of «recommendations aimed at reducing uncertainty and achieving a balance between technological innovation and protection of investors.» They were clearly determined that bitcoin is not a security. Then it became one of the first such precedents, as most of the world countries trying to determine their position on this issue. For example, last summer, the Commission on securities and exchange Commission (SEC) equated
the tokens-the shares of ICO securities. The Chairman of SEC said
in June of this year that bitcoin security is not.
As for Israel, the authorities of the country in March took
the decision to exclude cryptocurrency companies from the indices due to the high volatility and risk for passive investors who track these indices. And in February of this year the Tax administration of the country confirmed
the taxation of bitcoin as property. This means that the profit from cryptocurrencies will be taxed on capital gains from 20% to 25%. While individual miners or traders cryptocurrency related businesses, should pay a tax of 17% value-added tax (VAT) in addition to the tax on capital gains.
However, the General policy of the country against the cryptocurrency industry is by no means prohibitive. In February of this year, the Supreme court of Israel has supported cryptomeria and banned
the Bank to refuse service to exchange Bits of Gold. This precedent is still seen as a major victory in the Israeli cryptocurrency industry, which can serve as an example for companies and regulators in other countries.