Israel Tax Authority is mulling a plan to impose taxes on the profits earned from Bitcoin trading, as according to a source from the body Bitcoin trading in one way or another involves financial transactions and profits; it can be brought under taxation. Currently, the statutory body is studying Bitcoin activity and may come with any clear roadmap later.
Taxing Profits from Bitcoin Trading Will Solve Several Other Issues Too
A state of confusion exists among banks as they do not know how to deal with this new currency, which is not only unprecedented but different from all other currencies in terms of its nature.
The Bank of Israel also does not have any answer whether Bitcoin is legal? For the time being, the Bank of Israel is taking its time to study the virtual currency and its implications to come up with any idea later on. Also, whether Bitcoin is taxable is not clear.
Regarding its misuse for money laundering issues, the Bank of Israel says that it couldn’t give any guidance and as it is a new topic, they want time to learn about it. Thus, it all is generating an atmosphere where Bitcoin is facing uncertainties and so are the customers as there are limitations on Bitcoin transactions.
Stakeholders Request for Greater Clarity
It is due to uncertainty about the status of Bitcoin on the part of the government that Israel banks are limiting the value of international transfers allowed to be sent to Bitcoin exchanges.
Some customers who tried for international transfers allowed to be sent to Bitcoin exchanges; specifically to Japan, home of Mt.Gox and the most Bitcoin/money exchanging in the world faced limitation issues.
Now stakeholders have started questioning the stand taken by the government and request for a decision that clears the status of Bitcoin. They also request that government to take a stand and tell banks that Bitcoin transactions are permitted or if it feels, it is illegal then denounce that these transactions are forbidden.
It is not yet clear what model for taxing profits will be used, particularly when Israel does not recognize the virtual currency and yet wants Bitcoin traders to pay taxes on profits. Now that the Israel Tax Authority is mulling a plan to impose taxes on Bitcoin profits, stakeholders may have some respite as without legalizing Bitcoin, taxing the profits would not be possible.
To contact the reporter of this story: Deepak Tiwari at firstname.lastname@example.org