Bitcoin isn’t a currency and people buying and selling the cryptocurrency will be subject to tax, the Israel Tax Authority said Monday in an updated circular, Haaretz reported.
According to the guidelines, cryptocurrencies are assets rather than currencies, and will be taxed accordingly.
“As Bitcoin (TIKER: BTC.EXANTE) is being seen by the tax body as an asset, rather than a currency, any income made from digital transactions involving it will be taxed with the common 25% capital gains tax for private investors and 47% for businesses,” the authority said.
In addition, the tax authority also clarified that only businesses would be liable for the the 17% value-added tax, not individuals, because “Bitcoin is an intangible asset used for investment purposes only.”
Shahar Strauss, a tax lawyer with the Tel Aviv firm Ziv Sharon & Company, said “the authority’s stance ignore economic realities.”,
“According to the Tax Authority, investing in the esoteric currency of some Pacific island that can’t be used in Israel and many other countries meets the definition of currency and is therefore entitled to a tax exemption, while investing in digital currency is not,” he said.
Last month, the Tax Authority outlined potential ways in which the government could tax ICOs. Under the proposal, companies or projects, through ICOs, who raise in excess of 15 million ILS ($4.2M USD) in revenue will fall under existing accounting regulations.