It is known that Israeli bitcoiners are required by law to pay a 25 percent capital gains tax while crypto-related businesses must compulsorily send their 25 percent tax plus another 17 percent VAT to the authorities. However, since the bill became law, quite a few people and businesses in Israel’s digital currency ecosystem have failed to remit their taxes.
Now, the authorities have gone all out to start fishing out defaulters.
According to reports, tax offices in Israel have started sending notices to all those they suspect are involved in digital currency related activities. The authorities are demanding for all information concerning their crypto operations including transaction history and portfolio details, bitcoinactivities, and more.
The tax authorities seem to have very reliable sources of information, as some offices don’t even go through the due process of requesting for crypto-related details from suspected bitcoin investors. Instead, they’d open a business case for the people they think are digital currency investors and mandate them to pay income taxes as businesses, fill in their trade reports back from 2013 while keeping balanced books. The tax offices also require their ‘victims’ to report taxes on salaries to employees just like other businesses.
With this latest development, Israel becomes the first nation to begin hunting down bitcoin tax evaders even though it is not the only country facing the challenge.
Tax Collectors Globally Want a Share of the Crypto Pie
In February 2018, BTCManagerthat the US Internal Revenue Service (IRS), the body in charge of tax-related matters in the state stated that less than a 100 people out of the over 250,000 hodlers in the country declared their crypto gains.
In spite of this fact, authorities have not resorted to chasing bitcoiners all around town like Israel is doing presently despite having made frantic efforts to identify bitcoin investors. Notably, in November 2016, the IRS issued a John Doe summons on Coinbase, in a bid to get the bitcoin exchange’s customer data. However, the move proved futile as the exchange refused to grant the request of the tax agency.
“We want to work with law enforcement, that’s generally our policy. But we can’t tolerate sweeping fishing expeditions. We are very concerned about the financial privacy rights of our customers,” said Coinbase’s head legal counsel, Juan Suarez back in November 2016.
Banks and Social Media Aiding the Chase
Although the Israeli tax authorities have not disclosed their sources of information concerning bitcoiners in the region, it is, however, possible that Israeli Banks have been aiding the entire process.
In recent times quite many crypto-related businesses have filed lawsuits against banks in the region for denying them banking services. Also, sources close to the matter have hinted that officials are now monitoring residents to find out peer-to-peer crypto transactions on social media such as Telegram, Facebook, and others and cross-referencing them with other available evidence.