Israel’s State Comptroller, Matanyahu Englman, recently spotlighted the Tax Authority’s limited efforts in collecting crypto taxes, which could have generated nearly 3 billion shekels ($800 million) for the Finance Ministry, especially critical amid the nation’s rising debt burden due to ongoing conflict.
The report, published by Globes, reveals that an audit covering 2018 to 2022 found significant underreporting in crypto transactions. Despite Israel’s estimated 200,000 to 1.7 million crypto wallet owners, only around 500 crypto-related transactions were reported annually—a rate of just 0.25% of potential transactions.
Minimal Guidance on Crypto Taxation
Israel’s Tax Authority has issued only three crypto-tax guidance documents since 2018, and none have been updated to meet the evolving crypto sector’s demands. Currently, the country classifies crypto as an asset, subjecting it to capital gains tax and other tax obligations. However, critics say outdated guidelines fall short of addressing the sector’s growth and complexity.
Measures Against Terrorism Financing
Alongside tax efforts, Israel’s National Bureau for Counter Terror Financing (NBCTF) has intensified efforts to curb crypto’s role in funding terrorism. Numerous crypto accounts linked to groups like Hamas have been seized, especially on exchanges like Binance. Last year, Israel’s blockchain analysis led to the seizure of millions in crypto funds tied to Hamas, Palestinian Islamic Jihad (PIJ), and Hezbollah.
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