Bitcoin Aversion by Israeli Banks Hindering Crypto tax Payments
Israeli media sources say bitcoin traders in the country are finding it difficult to pay taxes as banks continue to refuse crypto deposits, August 6, 2019. Banks in many countries refuse to accept deposits from crypto-related activities based on fears of money laundering and other illicit financial activities.
Israeli Bitcoiners Can’t Pay Crypto Taxes
According to Haaretz, bitcoin and crypto owners in Israel are facing a difficult time paying their taxes. The problem stems from many banks refusing to accept shekel deposits from the gains accrued from cryptocurrency investments.
Without shekels in their local bank accounts, many Israeli crypto investors are having heavy liens placed on their accounts. Commenting on the matter, Ron Gross, an Israeli bitcoin investor speaking to Haaretz revealed:
“The tax authority is aware of the problem, but they say the ball isn’t in their court. I’ve tried working with almost all the banks, but the minute they hear the word ‘Bitcoin’ they freeze up.”
For Gross and other crypto owners in the country, running afoul of the tax authorities could lead to serious problems down the line. As reported by BTCManager back in May 2019, Noam Copel, an Israeli bitcoin investor was forced to pay close to $900,000 for crypto tax evasion.
For now, Israeli crypto owners have to take the arduous route of challenging their banks are getting the tax authority to understand the issues currently being faced.
The Israel Tax Authority reportedly takes the matter of cryptocurrency taxation rather seriously. Individual cryptocurrency owners have to pay a 25 percent gains tax on profits from digital asset trading while for corporations, the fee is 47 percent.
According to reports, the tax body believes estimates the government is owed about $86 million in unpaid cryptocurrency taxes. Some commentators even say the figure may be significantly higher.
Relying on Old Information
Reports indicate that banks are refusing to accept deposits from crypto sources based on fear of facilitating illicit financial transactions. There is no ban on cryptocurrencies in Israel but banks are basing their crypto aversion from a warning issued by financial regulators in the country more than five years ago.
So far, the Bank of Israel — the country’s central bank, hasn’t issued any ruling on how banks should deal with cryptocurrency. During the legal standoff between Bits of Gold exchange and Bank Leumi, the apex bank declared that banks should take precautions against the risk of crypto businesses but advised against measures like terminating the accounts of cryptocurrency establishments.