Government considers taxing Bitcoin profits

In the Tax Authority's opinion, whoever profits from Bitcoin trading owes tax although at this stage it is not yet clear what model for taxing profits will be used.

The Tax Authority is considering imposing a tax on profits from the Bitcoin virtual currency. The authority is studying Bitcoin activity and a source in the authority said, "We cannot ignore this phenomenon which one way or another involves financial transactions and therefore we are examining its importance."

In the Tax Authority's opinion, whoever profits from Bitcoin trading owes tax although at this stage it is not yet clear what model for taxing profits will be used because in reality the Bitcoin is not recognized as an official currency.

The Bitcoin was created in 2009 by an untraceable Japanese hacker using the probably fictional name Satoshi Nakamoto. The aim was to break the dependency on government issued currencies and become the preferred global currency. Between 2010 and 2013, the virtual currency gained in popularity and rose in value from $5 at the start of 2012 to $266 in April 2013. The value then crashed but has stabilized at $90-100 since July.

The "under the radar" activity of the Bitcoin has not only attracted the attention of the Tax Authority. Anti-money laundering authorities are also concerned that the virtual currency provides money laundering opportunities.

Published by Globes [online], Israel business news - www.globes-online.com - on September 12, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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