The Israel Tax Authority's voluntary cryptocurrency disclosure program has received reports covering only about $50 million in crypto capital, far below the $1 billion in taxable gains authorities expected. The policy offers immunity from criminal proceedings to eligible filers who correct past tax reports, provided their holdings did not exceed $522,000 as of December 2024 and they pay required taxes by Aug. 31, 2026. Only 58 filers have reportedly participated in the program. The weak response reflects concerns about anonymity and low perceived enforcement risk, according to Iftach Simhony, a CPA and head of the tax department at the Prof. Bein Law Office, who noted that when taxpayers assess their risk as low and the procedure lacks certainty or first-stage anonymity, the incentive to disclose weakens. The shortfall highlights broader challenges governments face in taxing digital assets, particularly when enforcement depends on transaction visibility and platform reporting.
Israel Tax Authority Sets Aug. 31, 2026 Deadline for Crypto Disclosure Program
The voluntary disclosure procedure gives crypto holders immunity from criminal charges if they meet several conditions. The value of their holdings must not have exceeded the equivalent of $522,000 as of December 2024, they must file correct reports, and they must pay the required taxes in full before Aug. 31, 2026.
Only 58 filers have reportedly attempted to correct their taxes under the procedure. That number is low relative to the size of Israel's crypto market.
"In the cryptocurrency field, the difficulty of the absence of an anonymous track is even more acute," said Iftach Simhony. "When the risk assessment of some taxpayers is not high, and the procedure itself does not offer certainty or anonymity in the first stage, the incentive to undergo voluntary disclosure is weakened."
Bank of Israel Reports $1 Billion in 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. Against that backdrop, reports of only $50 million in disclosed crypto capital suggest that a large portion of the market may still sit outside clear tax reporting.
The disclosure gap highlights a regulatory challenge for governments trying to tax digital assets. Crypto markets create taxable gains, but enforcement depends on transaction visibility, platform reporting, banking links, and the ability to connect wallet activity to taxpayers.
U.S. Congress Introduces PARITY Act in May
The Israeli approach differs from recent proposals in the U.S., where lawmakers have looked at reducing compliance burdens for small crypto transactions. Members of Congress introduced the PARITY Act in May, which would direct the Internal Revenue Service to review creating a de minimis exemption for digital assets.
Under that proposed framework, taxpayers could not be forced to report small crypto transactions. The goal is to avoid treating every minor crypto payment or transfer as a full tax-reporting event.
Israel is trying to draw undeclared crypto profits into the tax system through voluntary disclosure and criminal immunity. The U.S. proposal focuses on narrowing reporting duties for small transactions while keeping larger taxable activity within the system.
FAQ
What did the Israel Tax Authority expect from the crypto disclosure program?
Authorities expected the voluntary disclosure program to bring in up to $1 billion in taxable crypto gains. So far, the tax authority has received reports covering only about $50 million in crypto capital.
What are the requirements for immunity under Israel's crypto tax disclosure policy?
The policy gives crypto holders immunity from criminal charges if their holdings did not exceed $522,000 as of December 2024, they file correct reports, and they pay required taxes in full before Aug. 31, 2026.
How does the U.S. PARITY Act differ from Israel's crypto tax approach?
Members of Congress introduced the PARITY Act in May, which would direct the IRS to review creating a de minimis exemption for digital assets, reducing reporting duties for small transactions. Israel's program focuses on voluntary disclosure of past undeclared profits with criminal immunity for eligible filers.
