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Foreign residents of Israel may be exempt from capital gains tax on the sale of digital currencies. A bill that would provide that and other tax benefits to digital asset holders pass Through preliminary reading in the country’s parliament (Knesset) on 5 June.
The bill would also club crypto bonuses with stock options for employees, reducing the current 50% tax on the former to 25%. The initiative is sponsored by Dan Ilouz, a 37-year-old Member of Parliament from the ruling Likud party. According to Ilouz, the bill has full support of the ruling coalition.
According to the Bill’s explanatory note, it should enhance the country’s appeal to investors around the world:
“Despite the growth potential of Israeli companies in the sector, the regulatory reality in Israel is not favorable to the digital currency industry. Therefore, several legislative amendments are proposed to be made which will reduce the regulatory gap.
“The bill proposes that foreign residents would also be exempt from capital gains tax on the sale of digital currencies from Israeli-based companies,” Nir Hirschman and Shauli Rezwan, co-founders of the Israeli Crypto Companies Forum (ICBW3), explained to Cointelegraph. He believes that the country is now seeing an expansion in regulatory openness:
“The significance of last night’s vote result is that Israel is supporting cryptocurrencies wholeheartedly. Similar to Rishi Sunak in the United Kingdom and MPs across Europe, Finance Minister Bezalel Smotrich has energized the local sector and urged global investors and Has issued a clarion call to companies – Israel invites you to engage in business on our shores.”
Notably, the bill also proposes to use the term “digital currency” separately from “security”. However, in its proposed regulatory framework for early 2023, the Israel Securities Authority (ISA) suggested the inclusion of “digital assets” under the “security” category. Industry reacted with deep concern to that initiative.
In April, the Bank of Israel launched its central bank digital currency (CBDC) project. However, as stated at the time, the bank’s special committee “has not yet taken a formal decision”. mentioned Possible scenarios for the development and deployment of digital shackles called “SHAKED”.
