Preliminary Reading of Bill Granting Tax Exemption to Foreigners in Israeli Crypto Market Successfully Passes

A bill seeking to exempt foreign residents from capital gains taxes on the sale of digital currencies has passed its preliminary reading in the Israeli parliament, known as the Knesset. The proposed legislation, introduced by Knesset member Dan Ilouz, aims to provide tax benefits and attract global investors to the country’s digital asset market. The bill also aims to reduce the tax rate on crypto bonuses for employees from 50% to 25%, aligning it with stock options.

According to the bill’s explanatory note, the regulatory environment in Israel is not yet suitable for the digital currency industry, despite the growth potential of Israeli companies in the field. The proposed legislative amendments seek to bridge this regulatory gap and make Israel more appealing to investors in the global crypto market.

Nir Hirshman and Shauli Rejwan, co-founders of the Israeli Crypto Companies Forum (ICBW3), highlighted the significance of the bill’s progress, noting that it demonstrates Israel’s endorsement of cryptocurrencies. They compared it to similar moves by finance ministers in the United Kingdom and lawmakers across Europe, emphasizing Israel’s invitation to global investors and companies to engage in business within its borders.

In addition to the tax exemption, the bill also suggests distinguishing the term “digital currency” from “security” in regulatory frameworks. This proposal comes amidst concerns raised by the Israeli Securities Authority’s suggestion to include digital assets under the “security” category in its proposed regulatory framework, which was set to take effect in early 2023.

Meanwhile, the Bank of Israel has indicated its interest in exploring a central bank digital currency (CBDC) project, although no formal decision has been made yet. The bank’s special committee has outlined potential scenarios for developing and deploying a digital shekel, signaling the country’s continued interest in exploring the realm of digital currencies.

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