The cryptocurrency community in Israel now has some clarity about the legal status of Bitcoin in their country. The country’s tax authorities have recently announced that Bitcoin and other cryptocurrencies will be considered as assets and are taxable.
The legal status of Bitcoin has always been a grey area in many countries across the world. But with the Israeli authorities clarifying their stance over the cryptocurrency, people can now manage their tax filings accordingly. At the same time, few community members have expressed their concerns over certain prohibitive clauses that might make cryptocurrency usage a very costly affair.
According to media reports, the Israel Tax Authority clarified the tax rules about Bitcoin and other cryptocurrencies in its latest draft paper. The authorities claim to have done so following multiple requests from the cryptocurrency community within the country. However, it is not clear when Israel will implement the regulations.
The authorities have classified cryptocurrencies as assets that are not synonymous with financial securities or stocks. At the same time, it will not be considered as a form of currency either. It also makes cryptocurrencies eligible for a 25 percent capital gains tax whenever somebody sells their cryptocurrency holding. Also, the exchanges trading cryptocurrencies will have to charge a 17 percent VAT for asset sales and pass it on to the government in addition to the existing corporate income tax.
The new draft is set to increase the cost of every single cryptocurrency transaction in the country, negating some of its benefits. Also, the implementation of such draft rules is expected to make it much harder for businesses receiving cryptocurrency payments as they will have to classify it as a barter and file paperwork accordingly, says an online financial magazine.
Bitcoin has already proven itself to be a reliable form of currency. The digital currency, like gold, satisfies all the properties of an ideal money. But governments are hesitant to call Bitcoin a currency as they should, mainly because they fear losing control over the monetary system.
The situation is expected to remain the same for a long time unless some country wakes up and decides to call bitcoin a form of currency openly.
Ref: Finance Magnates | Image: NewsBTC