A new development has emerged in Israel, as foreign residents may soon be exempted from capital gains taxes when making digital currency transactions. The promising legislation, which includes a range of tax benefits for holders of digital assets, passed its preliminary reading in the country’s parliament last month.
The New Zero Tax Bill For Crypto
According to reports, the Knesset, which is the country’s parliamentary body, has successfully passed the preliminary bill proposing the exemption of foreign residents in Israel from paying crypto tax. The bill proposed a transformative change by seeking to align the taxation of crypto bonuses with stock options for employees, effectively halving their tax rate from 50% to 25%.
Spearheaded by Knesset member Dan Ilouz, the new legislation has attracted substantial backing from the ruling coalition parties, cementing its potential for implementation. Moreover, the bill’s explanatory note highlighted that its objective is to bolster Israel’s global appeal among investors.
By introducing favorable tax reforms for digital assets, the country aims to position itself as an attractive destination for domestic and international crypto investors. According to the bill, Israel’s corporate regulatory clarity has yet to reflect in the digital asset space.
As a result, the legislation seeks to make some amendments to close the regulatory gaps and accommodate the crypto industry. Additionally, this forward-thinking approach demonstrates Israel’s commitment to embracing the transformative potential of cryptocurrencies while remaining steadfast in its pursuit of economic growth and global competitiveness.
What The Bill Entails
Nir Hirshman and Shauli Rejwan, co-founders of the Israeli Crypto Companies Forum (ICBW3), explained that the latest move signifies remarkable progress in regulatory openness. In addition, the bill reflects Israel’s commitment to fostering an environment that encourages innovation and attracts international participation to its digital currency sector.
Analysts also opined that the legislative move positions Israel as a forward-thinking nation that recognizes the potential of digital currencies. Hence, it would enable the country to establish itself as one of the leading hubs for crypto-related activities.
While it presents a multi-layered approach, the legislation seeks to distinguish the term “digital currency” from “security.” Furthermore, it addresses recent concerns arising from the Israeli Securities Authority’s (ISA) proposed regulatory framework earlier in the year.
The ISA had previously suggested including digital assets within the “security” category. However, the suggestion sparked fears within the industry, prompting the agency to retract this proposal.
Meanwhile, the Bank of Israel is progressing with its central bank digital currency (CBDC) project. Accordingly, the apex bank unveiled preliminary details of this project three months ago.
While emphasizing that a formal decision is still pending, the central bank’s special committee outlined various potential scenarios for deploying the digital shekel. These recent developments underscore Israel’s determination not to stifle the growth of the digital currency industry by providing regulatory clarity.
