Israel published draft plan for taxing ICOs

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The draft circular issued by the Israel Tax Authority on Wednesday, suggests the imposition of VAT on ICOs, differentiating them into two types: service transactions and sales transactions. The draft seems to indicate that the goods or services offered to foreign residents would lead to a "zero tax invoice" in accordance with applicable law.

Although the draft outlines possible methods for taxing companies that launch tokens, it does not directly affect cryptocurrencies, according to a report posted on the agency's website.

The project detailed the various classifications for companies launching campaigns that use a case of blockchain, focusing on the types of products or services offered by the company, as well as on any profit model that it can accept.

According to the draft, sales of tokens, which receive more than 15 million Israeli new shekels (INS), will be regulated by the accounting rules in accordance with the current legislation.

Investors who sell tokens, which they have already purchased from an ICO, would also be taxed, the circular explained. However, groups that trade as a business would be "classified and registered as a financial institutions" specifically for tax purposes, according to the project.

The circular stressed that it could be changed, and the Israel Tax Authority is looking for public input into the above provisions.