The CPA’s Chamber calls for the regulation of crypto taxation: “Time for brave decisions”

by time news

Institute of Certified Public Accountants Issues the regulation and enforcement of regulations regarding crypto activity and digital currency trading: President of the Bureau, CPA Chen Schreiber, Announced the establishment of an expert committee that will work to formulate recommendations for the tax authorities and the Supervisor of the Capital Market, Dr. Moshe Barkat.

According to the Authority’s position, published in 2018, investors in digital currencies are subject to a 25% capital gains tax, as long as their activity does not turn into a business. In the event that the activity amounts to a business, the dealer will be charged a two-stage tax as a company or a marginal tax according to the individual tax brackets.

In recent years, against the background of the revival in the digital currency market, and especially the jump of Bitcoin, and at the same time the intense need to fill the state coffers, the Tax Authority has begun mapping the crypto market in Israel, demanding information from wallet and currency holders.

At the same time, an anti-money laundering order (identification, reporting and management records of creditors to prevent money laundering and terrorist financing) recently came into force, designed to deal with money laundering and expose money launderers, by imposing an obligation on credit service providers to identify and verify their customers’ details. And report, subject to certain conditions, the financial transfers of those customers.

The purpose of the current amendment to the order is to apply the money laundering regime to financial asset service providers as well, thus enabling them to act as additional significant players in the non-bank credit industry. The definition of a service in a financial asset that is amended to the order, includes all transactions in financial assets through employment, which do not provide credit, including, inter alia, also the provision of services regarding “virtual currency”, with the intention of supervising non-tangible financial services.

In light of the entry into force of the Anti-Money Laundering Order on Financial Service Providers and the growing discourse on the subject, one of the first decisions of the President of the Institute of Certified Public Accountants Chen Schreiber concerns what is perceived as the “hot potato” affecting a variety of service providers. ), When what they all have in common is the need for a supervised, orderly and transparent accounting and taxation mechanism. For Schreiber’s approach, the entry into force of the order opens the door to granting a permanent operating license to entities engaged in digital currencies. However, the responsible regulator, in charge of the Capital Market Authority, is still in the process of reviewing various crypto entities that have applied for a license.

According to the Institute of Certified Public Accountants, a series of decisions and orders issued in recent years, both by the Bank of Israel and the Capital Market Supervision Division, have attempted to set clear boundaries and create disclosure mechanisms, but in practice. , So that in the field where we see a flourishing of the local fintech industry, we are witnessing an alarming stalemate.

According to Schreiber, “In many countries, including Canada, Japan and the United States, banks allow for uninterrupted crypto activity, along with a professional enforcement system and the ability to collect billions of dollars in cryptocurrencies, while the US also has a Nasdaq crypto exchange. . But here, despite an explicit ruling by the Israeli Supreme Court as early as February 2018, according to which banks must allow supervised crypto activity in customer accounts while managing risk in a controlled manner, most banks refuse to allow funds to be transferred to and from the accounts. Receives a proper response. “

He added: “We receive dozens of inquiries a day from accountants who feel exposed and who want to take action to rectify the situation. It is time to make courageous decisions. It is inconceivable that in the State of Israel 2021, hundreds of thousands of Israelis will buy and sell crypto through international credit cards or digital platforms. The law (securities laws, the Financial Services Supervision Law, the prohibition of money laundering, etc.) and non-reporting to the tax authority, all in the absence of enforcement by the Capital Market Authority and other regulators.

“Israel is rightly considered a powerhouse of high-tech, fintech and blockchain. Hundreds of Israeli companies, some of them leading and pioneering in their field, are developing services and technologies aimed at creating efficient and innovative tools in the field of finance and banking. Here we are significantly behind many countries in the world – and the result is the flight of many Israeli entrepreneurs abroad. Dealing with the money of ‘others’ must be regulated in a clear and unambiguous manner, both in order to create security for the public whose money is handled by the various companies, and in order to produce certainty in the entrepreneurs that they are acting lawfully. Therefore, regulation is needed, which will also know how to answer various questions of the developers (Pre ruling).

“Many accountants who are knowledgeable in the field and with whom we spoke, spoke of uncertainty and fear of acting for their clients so as not to be exposed themselves. It is time to put an end to this customer and regulate this important arena.”

You may also like

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.