Israel’s crypto sector is set to receive certain tax benefits as a new bill passes its preliminary reading in the Knesset, the country’s parliament.
The Proposed Bill and Its Implications
The bill, introduced by Knesset member Dan Illouz, has gained the full support of Israel’s coalition government, led by Prime Minister Benjamin Netanyahu. This legislation forms part of a broader economic strategy aimed at attracting investors and companies to the country.
According to the bill’s explanatory note, despite the growth potential of Israeli companies in the digital currency industry, the existing regulatory framework does not adequately address its needs. To bridge this gap, several legislative amendments are proposed.
If the bill becomes law, foreign residents would be exempt from capital gains tax on the sale of digital assets. Additionally, the tax rate on crypto options would be reduced from 50% to approximately 25%. These changes would provide tax benefits to Israel’s crypto sector, similar to those already enjoyed by high-tech firms.
Mr. Illouz highlighted the disparity in taxation between the crypto industry and the traditional high-tech sector, stating that workers in the former had to pay double the tax on their options. Furthermore, foreign investors in the blockchain industry were not entitled to the same benefits as those in the traditional high-tech industry. The proposed amendment aims to rectify this imbalance and eliminate discrimination in taxation.
Embracing the Crypto Industry
Israel’s decision to equalize taxation for crypto investors demonstrates the country’s active embrace of the industry.
Efforts to integrate cryptocurrencies into the Israeli economy have been ongoing. In February, the Bank of Israel, the country’s central bank, issued principles for regulating stablecoin activity. These guidelines set the groundwork for the responsible implementation of stablecoins within the Israeli financial system.
Moreover, the Tel Aviv Stock Exchange announced that the Israeli government would conduct tests on a blockchain-based platform for issuing digital bonds called “Eden.” This innovative project aims to streamline the procedure of national bond issuance, reducing costs and increasing efficiency.
Bank Leumi, Israel’s largest bank, has also pledged to become the first Israeli bank to facilitate crypto trading. Through its digital platform, Pepper Invest, the bank will collaborate with Paxos, enabling customers to securely buy, hold, and sell cryptocurrencies.
Conclusion
Israel’s proposed bill to grant tax exemptions and reduce tax rates for foreign residents and the crypto sector signifies a proactive approach to attract investments and promote economic growth. With ongoing efforts to integrate cryptocurrencies into various aspects of the country’s financial landscape, Israel positions itself as a progressive player in the global crypto industry.
