The Israel Tax Authority (ITA) has been banning Bitcoin trading for some time. So now they explore on social media channels for Bitcoin traders. Traders are warned to disclose all trades and wallets also to report returns.
At the beginning of the year, the authority declared taxation on cryptocurrency. Thus, any capital gains tax of 25 percent is payable on any profits. If you run a company that trades with Bitcoin & Co., you will pay another 17 percent VAT. The categorization drew a controversy back then because one ignores the economic reality. Now the attitude against the digital gold takes on further traits: Private persons are targeted by the tax inspectors.
Social media channels used as an exchange
In Israel, it does not seem unusual for buyers and sellers of cryptocurrencies to connect via social networks. But, this form of exchange is a problem in the eyes of the Israeli tax authority, because very few claim their trades on the tax. Therefore, the ITA advises the people to disclose all relevant information. This means, on the one hand, all trades and wallets data are required until 2013.
The ITA also records influential people. The ITA does not want to announce how the authorities got the information. As the banking sector in Israel reacts negatively to Bitcoin, it seems likely that the banks will proactively pass on the data of their customers. On the other hand, it is not excluded that even undercover agents are on the social networks.
An advantage for Decentralized Exchanges
The social media are primarily for the connection between acquaintances – not for the exchange of cryptocurrencies. Messages can either be read publicly by everyone, or by the particular company (Twitter, Facebook, WhatsApp, etc.). In the case of a court order, companies are likely to disclose customer information.
As an alternative to social media, decentralized exchanges ( DEX ) can serve better. The communication traffic is encrypted here end-to-end. In addition, there is no single point of failure – no company that can be under pressure from an authority.
