A giant Israeli cryptocurrency exchange known as Bits of Gold has agreed to share all customers' transaction particulars with the tax authority of the country.
Following the terms of the agreement, Bits of Gold will give full information of the customers that have transacted over $50,000 for over last year to the Israel Tax Authority, according to the local publication, Calcalist.
Although the country's law commands that financial brokerages are obligated to give information of bulk and suspicious transactions directly to Israel Money Laundering and Terror Financing Prohibition Authority (IMPA), they aren't inevitably obliged to act the same with the country's tax authority on account of privacy concerns.
Previously, an Israel major court repudiated a request from the tax authority to take a client list from a bank that is bankrupt since the particulars are properly protected under privacy laws.
It is prudent that this agreement has known how Bits of Gold agreed to provide client information to the tax authority and the latter seeks data to carry out a thorough tax evasion and money laundering check.
In June, the tax authority audited the books of Bits of Gold, targeting both the company and the clients. It appears that the Bits of Gold is the first crypto exchange to be handled in this way by the tax authority, and it is assumed that the tax authority will also be examining other local crypto exchanges.
The Israel Tax Authority initially outlined tax guidelines for crypto early last year. Bitcoin, Ethereum plus very many cryptocurrencies have been recognised as assets wherein bitcoin miners and retail investors are imposed fixed business tax rates. Even though individual investors are obliged to provide the capital gains tax rate of 25 percent for profits from cryptocurrency trading, crypto exchanges are again obliged to levy a 17 percent VAT on their customers.
Furthermore, the tax authority has made more specific fundraising via Initial Coin Offerings in previous months.
Earlier this year, the tax authority doubled down on its stance to ratify cryptocurrency investors are subject to capital gains taxes.