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.
Israel’s Tax Authority Criticized for Minimal Crypto Tax Guidance
Since 2018, the Tax Authority has shown minimal initiative in addressing the taxation of crypto, releasing merely three documents on the subject, the report added. These publications have not been revisited or revised, leaving them outdated in the face of the market’s swift evolution.
Consequently, the rules currently in place fail to reflect the dynamic nature of this burgeoning sector.
Israel’s Tax Authority categorizes cryptocurrencies as assets, subjecting them to capital gains tax among other fiscal obligations.
Strong Measures Against Terrorism Financing
Concurrently, Israel has taken strong measures to curb the use of cryptocurrencies for funding terrorism.
The National Bureau for Counter Terror Financing (NBCTF) has targeted and seized numerous crypto accounts associated with terrorist organizations such as Hamas, with particular attention to activities on exchanges like Binance.
Last year, investigations showed that Israeli authorities seized assets and analyzed blockchain data, uncovering that Hamas, Palestinian Islamic Jihad (PIJ), and Hezbollah received millions in cryptocurrency funding before attacking Israel.
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