The Knesset is now considering a law that would make Israel a more desirable location for cryptocurrency investors.
The proposed legislation, which has Dan Ilouz as its supporter, would lower the tax rate on cryptocurrency bonuses from 50% to 25% and bring it into line with the tax rate on stock options. Ilouz claims that the measure has the backing of the parties in the government coalition and that it will likely soon become law.
The Israeli government is currently discriminating against crypto workers and foreign investors by taxing their options at twice the rate of workers in the traditional high-tech industry.
Foreign residents in Israel who engage in digital currency transactions could be exempt from capital gains taxes under a new proposition.
This would reduce their tax burden and could make Israel a more attractive destination for cryptocurrency-related businesses.
The crypto community will be watching closely as the bill progresses through the legislative process to see how the tax framework evolves.
The proposed legislation creates a new category for digital currencies, separate from securities. This is in response to the ISA’s initial proposal, which would have classified digital assets as securities. The ISA’s suggestion has been met with concerns from the industry.
It is a complicated decision whether or not to exclude financial transactions from governmental regulation and conventional financial institutions’ participation.
The argument has advantages and disadvantages on both sides. To decentralize their financial systems, certain nations, like El Salvador and the Central African Republic, have chosen to accept Bitcoin as legal tender. Some countries, like Israel, are still considering their choices.