Related News: Israel’s State Comptroller Holds Tax Authorities Accountable for $800 Million Crypto Tax Gap
Author: Shalini Nagarajan
Israel’s State Comptroller, Matanyahu Englman, reportedly held the tax authority responsible for not strengthening its crypto tax collection efforts. This comes as the nation’s debt burden rises amid ongoing war.
A Tuesday report from Israel’s top financial newspaper Globes states that the government could have collected 3 billion New Israel Shekels ($800m) in taxes for the Finance Ministry. Englman urged finding effective ways to tax crypto rather than raising public taxes.
An examination that the State Comptroller conducted spanning the years 2018 through 2022 revealed a concerning trend in crypto taxation.
On average, the Tax Authority was notified of just 500 transactions involving crypto annually. This figure starkly contrasts with the estimated number of crypto wallet owners, which ranges from about 200,000 to a possible high of 1.7m. Consequently, the percentage of reported transactions hovers at a mere 0.25%, indicating a significant under-reporting issue within this sector.
Click here now! Manage your assets and file your taxes for free with FinTax!
TaxDAO’s Commentary:
Israel was one of the earliest countries to establish principles for crypto taxation. However, while the EU, US, and other regions have made significant regulatory strides in recent years, Israel has fallen behind. The Israel Tax Authority treats crypto as property, subjecting capital gains from crypto sales to tax, yet Israel still lacks a comprehensive legal framework for taxing and regulating crypto assets. Meanwhile, Israel faces fiscal pressures to increase tax revenue to support national expenditures, particularly in defense and security. In this context, crypto assets have emerged as a prime target for boosting state tax income.
The State Comptroller’s report identifies several issues within Israel’s crypto tax regime and proposes recommendations, such as scientifically assessing tax potential, revising tax procedures, providing practical training for handling crypto-related documents, and adjusting reporting frequency and formats based on crypto usage patterns. These findings and suggestions indicate a thorough review and serious consideration of crypto asset taxation by the relevant Israeli departments. Objectively, taxing crypto assets remains a complex issue for countries worldwide; however, Israel’s crypto tax system shows substantial loopholes, and given the pressing fiscal demands, stricter crypto taxation appears imperative.
Israel’s influence on the global economy is significant, and the Middle East is becoming a hotspot for crypto assets. While a short-term increase in crypto asset taxation in Israel might negatively impact the local crypto industry, in the long run, this measure could lead to a more structured and transparent crypto asset framework, fostering compliant growth within Israel’s crypto sector. TaxDAO will closely monitor Israel’s next steps and provide timely updates on its reforms in the crypto tax landscape.
Source:
https://cryptonews.com/news/israel-auditor-blames-tax-agency-for-800m-crypto-tax-gap/
Click here now! Manage your assets and file your taxes for free with FinTax!