The Israeli Knesset has given its preliminary approval to a bill aimed at attracting foreign investment and providing regulatory clarity for the digital currency industry. The proposed legislation defines digital currencies as distinct from company securities and addresses the regulatory gap in the industry. Spearheaded by Knesset member Dan Ilouz, the bill seeks to promote the blockchain industry in Israel.
Tax Benefits for Foreign Residents
One of the key provisions of the bill is the exemption of foreign residents from capital gains tax on the sale of all digital currencies in Israel, including those issued by local firms. This amendment aims to encourage foreign investors to participate in the blockchain industry and take advantage of the existing securities exemption. By offering tax benefits, the Israeli government hopes to attract foreign capital and foster growth in the sector.
Tax Reduction on Crypto Bonuses
The bill also proposes a reduction in the tax rate imposed on crypto bonuses given to employees. Currently, these bonuses are subject to a 50% tax rate, but the bill suggests reducing it to 25%. The rationale behind this reduction is to align the taxation of crypto-based bonuses with that of bonuses given in the form of stock options. By implementing this change, the bill aims to support the hi-tech industry and create a more favorable environment for companies in the growth stage.
Clear Distinction between Digital Currencies and Securities
The bill emphasizes the distinction between digital currencies and securities, without delving into the intricacies of this classification. It acknowledges that the regulatory reality in Israel is not adapted to the digital currency industry, and amending legislation is necessary to address this gap. While the country’s securities regulator has proposed labeling digital currencies as securities, a final decision on this matter is yet to be legally determined.
Promoting Growth in the Digital Currency Industry
The proposed legislation aims to promote the growth of the digital currency industry in Israel by offering tax benefits and regulatory clarity. By exempting foreign residents from capital gains tax and reducing the tax rate on crypto bonuses, the bill seeks to attract foreign investment and provide incentives for companies to reward their employees. The intention is to create a more supportive and successful environment for the hi-tech sector in the country.
In summary, the Israeli Knesset’s approval of the bill signifies the government’s commitment to bolstering the digital currency industry. By introducing tax benefits and addressing regulatory gaps, the bill aims to attract foreign investors and promote growth in the sector. While the classification of digital currencies as securities remains a topic of discussion, the bill provides a framework for the industry to thrive.