A bill to extend certain tax benefits afforded to Israel’s high-tech firms to the country’s crypto sector passed a preliminary reading in the Knesset, the country’s parliament, on Wednesday, said Dan Illouz, a lawmaker in Prime Minister Benjamin Netanyahu’s Likud party.
If passed into law, the bill would exempt foreign residents from capital gains taxes on the sale of digital currencies and reduce tax on crypto options for employees – similar to stock options – to about 25% from 50%, according to the Israel Crypto, Blockchain and Web3 Companies Forum (ICBW3).
Up until now, workers in the crypto industry had to pay double the tax on their options compared to workers in the traditional high-tech industry. Moreover, foreign investors in the blockchain industry were not entitled to the same benefits as those entitled to investors in the traditional high-tech industry, Illouz said in a press statement. This law amendment aims to balance the situation and eliminate the discrimination in taxation.
The bill has the support of the coalition government led by Netanyahu, and aligns with his economic policies to attract investors and companies to Israel. Israel has been working to integrate crypto into its local economy by regulating the sector, with the government proposing guidelines for the treatment of digital assets and requirements for stablecoins. The country’s securities regulator is set to supervise crypto assets.
Finance Minister Bezalel Smotrich, who has shown support for the bill, is signaling that Israel is embracing crypto. This bold decision aligns Israel with U.K. and European countries that actively promote the industry, generating employment opportunities through clear regulations, said ICBW3 co-founders Nir Hirschmann Rub and Shauli Rejwan in a statement.
Illouz believes that with technology and crypto, Israel has the opportunity to compete with the major financial cities in the world such as London and New York. We must not miss it, he added.