Israeli lawmakers have proposed during a draft new law to treat bitcoin as a currency rather than an asset for tax purposes, local media reported.
According to a report from Globes, four legislators from the Yisrael Beiteinu party presented the tax Ordinance (Taxation of the Sale of Digital Currencies) bill within the Israeli parliament Knesset on September 22.
The bill by the four – MK Oded Forer, Yevgeny Soba, Yulia Malinovsky, and Alex Kushnir – proposes several changes to crypto taxation, including the amendment of the prevailing law to exempt digital assets like bitcoin (BTC) from capital gains tax. The bill says:
“The regulatory reality in Israel isn’t adapted to the prevailing reality within the field. [Digital currencies] will still be a growth engine that allows the Israeli high-tech industry to flourish and develop.”
Bitcoin is currently recognized as an asset in Israel, meaning that sales of the crypto or conversions to cash attract a capital gains tax of 25%. However, some users like short-term BTC lenders and people who undertake bonds-related activities pay capital gains of 15%.
In 2019, Israelis with an income of but $22,000 were reportedly taxed at a rate of 10%, on the typical – A level which may assume some significance should the proposed law be approved.
MK Forer said Israel, which already boasts a well-developed technology industry, had the power to be a pacesetter in crypto-based payments, particularly at a time of the coronavirus pandemic
“It is precise during this period, when the economic future isn’t clear, [that] it’s possible to market digital payment options thanks to the social distance that has been forced on us,” Forer opined.
Israel’s crypto sector is rapidly developing, but regulatory hindrances appear to be impeding growth. consistent with the Israeli Bitcoin Association, the amount of crypto companies within the Middle East country grew 32% between 2018 and 2019, with about 150 active blockchain and crypto companies by December last year