The tax administration of Israel urges citizens to pay taxes on cryptocurrency transactions.

Israel's tax regulatory Agency is taking active measures against cryptocurrency traders and investors who are suspected of tax evasion.

Local financial publication Calcalist writes that the Israeli Tax administration has sent letters calling to pay taxes to Israelis who can profit from trading digital assets, but did not declare it. Particular suspicion is caused by citizens who often travel abroad, but do not report the source of travel funding. Also, the regulator pays attention to the residents of the country who have several real estate objects (more than three apartments).

Also, within the last two weeks, the Israeli Tax administration opens unilaterally tax accounts for persons who, they believe, do not notify about income from cryptocurrency trading. The head of the Agency, Eran Yaakov (Yaakov Eran) reported that the search of unreported income will continue.

Tax liabilities of cryptocurrency traders appeared about two years ago, when bitcoin and other digital currencies were recognized as assets.

"Bitcoin will be considered an asset in the context of the income tax law, and its sale will be taxed as the sale of property," the Agency said in 2017.

At the moment, all cryptocurrency traders in Israel are required to pay 25% of each profitable transaction as a tax on realized capital gains. Platforms that provide the opportunity to trade digital assets and other services pay 17% VAT.

This system of taxation of the crypto-currency industry suits the authorities, since in February this year the Israeli Tax administration reported that in the foreseeable future it will not change.