Appearing in a brief video, Adv. Doron Levy addresses the connection between Israel’s voluntary disclosure efforts and cryptocurrency. He notes that the crypto market functions independently from standard banking systems, resulting in limited reporting to the Israel Tax Authority (ITA). Recognizing the rapid increase in crypto valuations, the ITA has initiated steps to pursue tax collection within this unregulated space.
Levy explains that voluntary disclosure has historically been a way for taxpayers to come clean about undeclared assets without facing significant penalties. However, introducing digital currencies has created new tax gaps, as transactions bypass traditional financial channels. This has led the ITA to update its approach, focusing on areas where hidden income might be generated.
He goes on to discuss how blockchain technology, the foundation of cryptocurrency, presents both a challenge and an opportunity for tax enforcement. While blockchain is notoriously difficult to regulate due to its decentralized nature, the transparent nature of the ledger allows some level of tracking. Levy points out that the ITA is starting to leverage this technology, seeking ways to identify patterns that may indicate tax evasion.
According to Levy, the ITA is not acting alone in this initiative; it is part of a global effort to control tax evasion tied to crypto. Many tax authorities are pooling resources and sharing knowledge to create a consistent approach to digital asset taxation. Levy believes that this collaborative approach is essential for dealing with a market that transcends borders.
He also addresses the need for regulatory clarity. Many crypto investors are unaware of their tax obligations, leading to confusion and, sometimes, unintentional non-compliance. Levy believes that through clearer guidelines and public awareness campaigns, the ITA can encourage taxpayers to voluntarily disclose their crypto holdings and settle any outstanding obligations.
Adv. Levy concludes by noting that this wave of voluntary disclosure may signal a shift toward more aggressive enforcement in digital finance. With crypto’s growth showing no signs of slowing, he expects the ITA to continue tightening regulations and exploring innovative solutions to capture tax revenue from this evolving market.
