Initial Coin Offerings have been expanding the last years. They have moved billions of dollars. Enterprises are switching to this new way of fundraising. Israel has been an important hub for start-ups and other high-tech enterprises. Indeed, Israel has been dubbed several times as the ‘start-up nation’. It seems that now it is going to regulate the market by taxing it.

Israel to Tax Initial Coin Offerings

The Israeli government is searching ways to tax Initial Coin Offerings. The information has been revealed with a statement released by the local authorities. ICOs, organizers and investors will be taxed. Once again, states and politics have found a new way to impose sanctions to prosperous and promising projects.

The director of the Israeli Tax Authority, Moshe Ashe, has explained that taxing ICOs the government is searching for transparency in the system.

“The Tax Authority is monitoring the technological developments and is working to provide an answer regarding the tax implications of virtual currency transactions and the issuance of digital tokens, thereby increasing the certainty and tax transparency of those operating in the field.”

ICO token holders will be taxed when they sell their ICOs. These project who rise 15 million Israeli new shekels (INS) (around $4,5 million dollars) will have to adhere to the bookkeeping regulations in the existing law. In this way, ICO organizers will remain transparent and trustworthy.

Not the First Regulations in Israel

This is not the first time that Israel decides to impose regulations and taxes on cryptocurrencies. In the past, the tax authority has declared Bitcoin as a taxable asset. That means that these individuals who invest in Bitcoin or other cryptocurrencies must pay 25 percent capital gains. In addition to it, cryptocurrency exchanges will charge their clients and investors 15 percent Value Added Tax (VAT).

“A person whose income from the sale of token reaches a level of a business, his income will be classified as a business income, and it will be subject to tax rates under sections 121 or 126 of the ordinance.”

These measures go against the view of some important figures in Israel. This is the case of Shmuel Hauser, professor of Business Administration at Ben-Gurion University of the Negev. He said that he believes that ICOs and cryptocurrencies must receive a favourable regulatory response. This would allow important investors the chance to develop an international financial centre for ICOs.

It is important to remember that Japan has received an economic increase of 0.3% of its GDP after cryptocurrency investors spent the profits gained by investing in cryptocurrencies.