Israel crypto tax plan misses target as reporting gap widens

Israeli tax authorities have received far fewer crypto tax corrections than expected under a voluntary disclosure program that offers criminal immunity to eligible taxpayers.

According to a Wednesday report by Globes, the Israel Tax Authority had expected the program to generate up to $1 billion in tax revenue from undeclared cryptocurrency profits. However, the authority has so far received disclosures covering only about $50 million in crypto capital, the report said.

Crypto disclosures fall short of tax authority expectations

Globes reported that only 58 taxpayers had used the voluntary disclosure route to correct earlier crypto tax filings. The figure remains far below the level officials expected after the policy was introduced in August 2025.

Under the procedure, eligible crypto holders can avoid criminal proceedings if they correct their reports and pay the full tax owed. Globes said the protection applies only where the value of the taxpayer’s crypto holdings did not exceed the equivalent of $522,000 as of December 2024.

The report added that taxpayers must submit accurate disclosures and complete the tax payment before Aug. 31, 2026. The low response has left the authority with a small share of the revenue it had expected from undeclared digital asset gains.

Lack of anonymous route weakens incentive

Iftach Simhony, a CPA and head of the tax department at Prof. Bein Law Office, told Globes that the procedure has a major weakness for crypto taxpayers because it does not include an anonymous track at the first stage.

Simhony said the absence of anonymity becomes more serious in cryptocurrency cases. According to his comments reported by Globes, taxpayers who do not believe their enforcement risk is high may have less reason to enter a process that exposes them before they receive certainty.

The Globes report said Israeli officials still believe large sums of crypto-related profits remain outside the tax system. It said authorities see the disclosed $50 million as only a small part of possible underreported holdings.

Bank of Israel data shows large crypto holdings

According to the Bank of Israel’s financial stability report for January to June 2024, Israelis held about $1 billion worth of crypto assets. The figure gives context to the gap between expected voluntary disclosures and the amount reported so far.

The weak uptake also comes as Israeli financial authorities have been paying closer attention to digital assets. As crypto.news previously reported, Israel had moved toward tighter stablecoin regulation as the Bank of Israel examined how private digital currencies could fit into the country’s future payments system.

At a recent financial conference, Bank of Israel officials said the central bank was reassessing the role of private digital currencies in daily transactions. The officials said stablecoins were moving beyond crypto trading circles and into payment discussions.

US lawmakers weigh small crypto tax relief

Outside Israel, crypto tax reporting has also drawn attention in the United States. Members of the US Congress introduced the PARITY Act in May, which would direct the IRS to review a de minimis exemption for digital assets.

Under the proposed measure, US taxpayers would not be required to report certain small crypto transactions to the IRS. The proposal comes as governments continue to weigh tax enforcement against the practical burden of reporting routine digital asset payments.