In what appears as being trapped down, Israeli banks refused to accept the deposit of funds realized as profit by the country’s Bitcoin (BTC) investors, which invariably affects payment of taxes.
The report today, by the Israeli newspaper Haaretz reveals development with the banks is part of an effort to reduce money laundering and terrorist financing concerns.
Notably, in Israel, the cryptocurrencies such as Bitcoin (BTC) is not recognized as a currency. Hence, earnings generated from trading them are subject to a 25% capital gains tax for individuals and a 47% corporate tax rate for corporations.
Those factors reportedly result in the Israel Tax Authority in demanding taxes from Bitcoin investors, who find themselves unable to pay them since they cannot deposit the earnings resulting from their investments as local fiat currency onto local bank accounts.
To the Israeli Government, those unpaid taxes represent a double loss, as the tax revenues and information about cryptocurrency activity would give it better insight into potential money laundering and black market activity.
The reported held the experience from an Israeli BTC investor Ron Gross, who invested in the cryptocurrency in 2011 and reported his earnings to the local tax authority.
Reportedly in 2017, his bank, Hapoalim, started refusing his deposit from the profits made in Bitcoin trading into the account. Gross met with bank officers, disclosing 70 pages of deposit records of Bitcoin earnings, but the bank continued to refuse to accept the funds.
“I’ve tried working with almost all the banks, but the minute they hear the word ‘Bitcoin’ they freeze up,” he added.
Although “the tax authority is aware of the problem,” a lien was placed in his bank account, home, and scooters, due to the fact that he was unable to pay his dues to the Israeli tax authority. “They say the ball isn’t in their court.”