The Israeli tax authority is using social media to track down bitcoin tax evaders

Israeli bitcoiners are known to be required by law to pay a 25 percent capital gains tax, while encrypted companies must send their taxes 25 percent plus another 17 percent VAT to the authorities. However, since the bill became law, many people and businesses in the Israeli digital currency ecosystem have failed to repay their taxes.

Now, the authorities have done everything to start fishing the defaulters.

According to reports, the tax offices in Israel have started sending communications to all those who suspect they are involved in activities related to the digital currency. Authorities require all information related to their cryptographic operations, including transaction history and portfolio details, bitcoin mining activities and more.

The tax authorities seem to have very reliable sources of information, since some offices are not even able to request details of cryptography from suspected bitcoin investors. Instead, they open a corporate case for people who think they are digital currency investors and require them to pay income taxes as businesses, compile their business relationships since 2013 while keeping books balanced. Tax offices also require their "victims" to report taxes on salaries to employees just like other companies.

With this latest development, Israel becomes the first nation to hunt down bitcoin tax evaders, even if it is not the only country that is facing the challenge.

Tax collectors all over the world want to share the Crypto Pie

In February 2018, BTCManager reported that the United States Internal Revenue Service (IRS), the entity responsible for tax issues in the state stated that less than 100 people among the over 250,000 hodlers in the country have declared their crypts gains.

Despite this, the authorities did not try to chase bitcoins across the city as Israel is currently doing, despite making frantic efforts to identify the bitcoin investors. In particular, in November 2016, IRS issued a call from John Doe on Coinbase, in an attempt to obtain the bitcoin exchange customer data. However, the move proved useless as the exchange refused to accommodate the request from the tax agency.

"We want to work with the forces of order, this is generally our policy, but we can not tolerate overwhelming fishing expeditions.We are very concerned about our clients' privacy rights," said Coinbase's chief lawyer, Juan Suarez, in November 2016.

Banks and social media Help hunting

Although Israeli tax authorities have not disclosed their sources of information on bitcoiners in the region, it is still possible that Israeli banks have helped the whole process.

In recent times, many encrypted companies have taken legal action against banks in the region for having denied their banking services. In addition, sources familiar with the matter have suggested that officials are now monitoring residents to discover peer-to-peer cryptographic transactions on social media such as Telegram, Facebook and others and cross-checking them with other available evidence.