Thursday, July 18, 2024

A bill to extend certain tax benefits afforded to Israel’s high-tech firms to the country’s crypto sector passed a preliminary reading in the Knesset, the country’s parliament, on Wednesday.

If passed into law, the bill would exempt foreign residents from capital gains taxes on the sale of digital currencies and reduce tax on crypto options for employees – similar to stock options – to about 25% from 50%, the Israel Crypto, Blockchain and Web3 Companies Forum (ICBW3) told CoinDesk.

The bill has the support of the coalition government led by Prime Minister Benjamin Netanyahu, and aligns with his economic policies to attract investors and companies to Israel, according to Dan Illouz, a lawmaker in Netanyahu’s Likud party.

“Up until now, workers in the crypto industry had to pay double the tax on their options compared to workers in the traditional high-tech industry. Moreover, foreign investors in the blockchain industry were not entitled to the same benefits as those entitled to investors in the traditional high-tech industry,” Illouz said in a press statement. “This law amendment aims to balance the situation and eliminate the discrimination in taxation.”

Israel has been working to integrate crypto into its local economy by regulating the sector, with the government proposing guidelines for the treatment of digital assets and requirements for stablecoins. The country’s securities regulator is set to supervise crypto assets.

“Finance Minister Bezalel Smotrich, who has shown support for the bill, is signaling that Israel is embracing crypto. This bold decision aligns Israel with U.K. and European countries that actively promote the industry, generating employment opportunities through clear regulations,” ICBW3 co-founders Nir Hirschmann Rub and Shauli Rejwan said in a statement to CoinDesk.

With technology and crypto, Israel has the opportunity to compete with the major financial cities in the world such as London and New York, Illouz said.

“We must not miss it,” he added.

Read more: Israel’s Central Bank Outlines Scenarios for Issuing a Digital Shekel

Edited by Sheldon Reback and Nikhilesh De.

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