Israel’s Bitcoin Investors Unable to Pay Taxes Due to Deposit Refusal by Banks
The Bitcoin investors in the state of Israel are struggling hard with paying their taxes because Israeli banks are refusing to accept and convert deposits gained from cryptocurrency investment returns. As reported few days ago by Israeli local news Haaretz, the banks in Israel are afraid that the earnings gained from Bitcoin investments could have terrorist or money laundering connections. Therefore, they are not allowing the crypto investors to deposit their crypto holdings. As a result, Israeli investors are not able to pay their taxes despite wanting to do so.
It needs to be said, that Israel doesn’t recognize Bitcoin as a currency. On top of that, the country imposes taxes on any earnings made out of cryptocurrency trading. So, they have to pay capital gains tax as large as 25% while corporations are subject to a 47 percent.
Thanks to these rules, the ITA (Israel Tax Authority) expect crypto investors to pay their taxes, but the investors are left helpless because they are not allowed to convert their earnings into local fiat deposits due to banks’ rejection.
Israel BTC investors trapped
Haaretz further brings out the dilemma of Israel BTC investors who are trapped between the banks and the tax authorities. Accounting the difficulties faced by an Israeli local bitcoin investor named Ron Gross, the outlet reports that Ron’s is facing denial to deposit his BTC earnings to his Hapoalim bank account since 2017.
After making such deposits has been forbidden, Ron not only tried to approach the bank officers but also brought up 70-page records detailing his past deposits made from his crypto investments. The bank, however, denied to change their stance once again. Ron proclaims that he has put a lot of effort to work it out with almost all the local banks, but banks step back as soon as they hear “Bitcoin” .
Ron isn’t the only one struggling. Another investor named Roy Arav has also been refused moving his BTC profits
to his personal account. Arav had opened a trustee account, worked with local crypto exchange Bit2C, to put his BTC profits. When he tried to make things happen between his trustee account and personal account, once again the bank declined the activity citing potential money laundering as well as terrorist financing. This left Arav incapable of paying his taxes, which made him sue the bank.
ITA says they are aware that about 86 million USD are still due as unpaid taxes on digital currency earnings. But the good news is, the ITA started to work on establishing a system that could potentially make life easier for BTC and crypto investors such as Roy.